Cash Collateral Account Law and Legal Definition

Cash Collateral Account is a Bank account in the name of a borrower that serves to secure and service a loan. While cash and check deposits are made into this account, it is considered essentially a zero-balance account and it cannot be drawn upon like a checking account. With a cash collateral account, money is deposited in a lockbox account; when the funds are collected and the deposits have cleared, the debt served by the account is reduced.