A secured party must provide value to a grantor, usually by extending a loan or credit. Value does not necessarily mean new value (except for certain PMSIs – see paragraphs 16.4.5 to 16.4.7 of chapter 16 (Attachment)).

Value can include any consideration that would support a contract, including a past debt or liability¹. A secured party can take a new security interest to secure advances of money already made, or credit already extended, and there will be value for the purposes of attachment. To be clear, new security for past debts or loans is still on risk of being set aside as either a preference or other voidable transaction².

To prove that value has been provided, secured parties may in some circumstances elect to make their advance of money directly to the source instead of to the grantor/ debtor.

For example, in acquisition transactions, a secured party may elect to pay a seller of say a truck being acquired with funds loaned by the secured party, instead of advancing to the grantor and leaving the grantor to pay the seller of the truck.