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In this video, certified public accountant Lena explains the concept of collateral in finance. Collateral is an asset accepted by a lender as security for a loan, serving as protection for the lender if the borrower defaults. If a borrower fails to repay, the lender can seize the collateral to recover losses. Collateral can include real estate or other assets, depending on the loan's purpose. For instance, if a sole proprietor borrows for their business, the lender can pursue all personal assets of the sole proprietor to recover any losses in case of default. Lena invites viewers to subscribe for more personal finance, tax, and small business content.