Imagine a safety net for a financial transaction. A Backstop is an agreement that provides a secondary source of funds or security in case something goes wrong. This can be seen in various contexts. For example, an underwriter might provide a backstop for an unsubscribed stock offering, guaranteeing to buy any unsold shares. Or, a loan might have a backstop from another source of funding in case the primary source falls short. Backstops offer an additional layer of protection and reduce financial risk.
