Senior Debt
Debt that has first priority for repayment ahead of other creditors if a business defaults or is liquidated.
Senior debt is typically secured by collateral and carries lower risk for the lender, which is why it generally comes with better rates and terms than subordinated or unsecured financing.
Most conventional bank loans, SBA loans, and asset-based lending fall into the senior debt category, and any later-added financing often needs to be structured as subordinate to it through a subordination agreement.
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