A security interest is a right that a secured creditor takes over collateral (i.e. the property) in return for providing a loan or other advance of value.
For example, a bank will take a security interest over a property when it loans a company money to buy that property.
There are two types of security interest:
- Non-circulating security interests (such as land, plant and equipment)
- Circulating security interests (such as cash, stock and debts owed to the company)