Yes, that is correct. If you want to use an asset as collateral, you must first supply it to the lender. This means that you must have the asset in your possession prior to attempting to use it as collateral. The lender will then assess the asset and determine if it is an acceptable form of collateral and if it meets the lender's criteria for collateral. If it does, the lender will then accept it as collateral and you can use it to secure a loan.