when a financial institution provides an unsecured loan to an individual or entity it may include a negative pledge clause in the contract in order to protect itself 
in this case the clause prevents the borrower from using its own assets to secure other sources of financing if the borrower secures other loans the original loan by the first institution becomes less secure because the borrower now has a greater amount of debt obligations and the original institution may not have priority status for repayment in the case of home mortgages many loan agreements include terminology that restricts the borrower from using the mortgaged property as collateral against any new loan except in the case of refinancing 