Final answer:
A junior lender can protect itself by requiring collateral and a subordination agreement to secure the loan and establish claim priority in case of default.
Step-by-step explanation:
Two ways a junior lender can protect itself from default include demanding collateral from the borrower and requiring a subordination agreement. Collateral involves the borrower offering assets such as property or equipment as security for the loan, which the lender can seize if the borrower defaults.
A subordination agreement is a legal document that junior lenders often require, where other lenders agree that their claims on the borrower's assets will be paid only after the junior lender's claim is settled in case of default.