In business law, what does a "security interest" provide to a lender?

A security interest provides a lender with a legal claim or lien on collateral associated with a loan. This is a critical concept in business law as it gives the lender certain rights over the borrower's assets if the borrower defaults on the loan. When a security interest is established, it allows the lender to take possession of or sell the collateral to recover the amount owed. This reduces the lender's risk and ensures that they have recourse in case of nonpayment, thus creating a more secure lending environment.

In contrast, the other options do not accurately describe what a security interest entails. While a guaranteed profit could be a goal of lending, it is not inherently part of what a security interest offers. Similarly, a share of the company’s equity relates to ownership stakes and investment rather than a lender's interest in collateral. Lastly, a fixed interest rate pertains to the terms of the loan itself rather than the rights attached to it through a security interest. Thus, the definition and function of a security interest distinctly focus on the lender's claim to collateral.