Offering collateral gives lenders an extra level of protection against a possible default scenario. A collateral loan agreement is a legal agreement, much like a standard loan agreement, but the borrower has put up assets as security for the loan.Obtaining payoff letters which confirm that a secured party will release its security interest in collateral and terminate UCC financing statements is crucial. Warrant payoff letter. The perfect loan for establishing new credit. Create a Loan Payoff Letter online and download it as a PDF or Word document. Customize and print a blank Loan Payoff Letter for free. Generally not required to secure the loan. – Additional collateral may be required if the business is a start-up, if the credit has unusual risk, or the asset. A payoff letter provides instructions on how to pay off a loan with a lump sum before the loan term ends.