This paper studies loan collateral and relationship lending. A firm has different loans (e.g. short-term loans and long-term loans) and alternative collateral assets. How does it allocate the collateral assets between the loans? It optimally secures a long-term loan with collateral that incurs high information costs initially and has a strong learning effect during the loan period (e.g. accounts receivables). A short-term loan is secured with collateral that requires a low information invesment and has a weak learning effect (e.g. goverment bond). It is optimal to secure long-term loans with long-term collateral and short-term loans with short-term collateral. If the loan period is short, unsecured lending may be optimal.