Extending credit entails risk. Seldom is a creditor absolutely assured of complete payment of his debt. Not only is there a risk in almost every loan, but the types of risks that must be weighed are manifold. The debtor may be a poor business person and never make a profit sufficient to repay the debt. The debtor class is replete with scoundrels and outright crooks who borrow money without any intention to service the debt. The economy may slump to such a degree that even astute business persons are pressed to pay their outstanding obligations. The creditor's collateral may deteriorate or vanish, and even if the collateral is preserved, another creditor may have first claim on the debtor's property.
The Purchase Money Security Interest in Inventory Versus the After-Acquired Property Interest-A "No Win" Situation,
U. Rich. L. Rev.
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