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Floating lien
Also called blanket lien, after-acquired property lien, all-assets lien.
A security interest that attaches not only to what the business owns when it signs but to whatever it acquires afterward within the covered categories.
Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.
What it means
The mechanism is the after-acquired property clause, permitted by UCC Article 9. Without it, a lender taking receivables and inventory as collateral would need new documents every time the stock turned over. With it, the lien attaches automatically to each new invoice and each new pallet, and to the proceeds when they convert to cash.
This is standard in asset-based lending and factoring, where the collateral is by nature revolving. It is also standard in merchant cash advance documents, which routinely take a blanket interest in all assets even though collection happens by ACH and the collateral is rarely enforced against.
Some categories are excluded by statute, and consumer goods and certain commercial tort claims are handled differently.
Where this one catches people
A blanket floating lien makes every subsequent financing conversation harder, including for assets the first secured party has no interest in. An equipment lender asked to fund a machine will find an all-assets filing ahead of it and want either a subordination or an intercreditor agreement, and the earlier party is under no obligation to give one. That is not a side effect; for some funders it is a retention strategy.
Where you will meet this term
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Floating lien — common questions
What does floating lien mean?
A security interest that attaches not only to what the business owns when it signs but to whatever it acquires afterward within the covered categories.
Where does floating lien catch people out?
A blanket floating lien makes every subsequent financing conversation harder, including for assets the first secured party has no interest in. An equipment lender asked to fund a machine will find an all-assets filing ahead of it and want either a subordination or an intercreditor agreement, and the earlier party is under no obligation to give one. That is not a side effect; for some funders it is a retention strategy.
Is floating lien the same as an interest rate?
Floating lien is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.
Which products does floating lien apply to?
Merchant Cash Advance, Business Line of Credit, Invoice Financing, Asset-Based Lending.
Is there a worked example of floating lien?
Not on this entry. Where a term is arithmetic, the arithmetic is shown; this one is not primarily a calculation.
What else should I read alongside floating lien?
Blanket lien, Collateral, Financing statement, Intercreditor agreement, Purchase-money security interest.
Has this definition been checked?
Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.
Is this legal advice?
No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.
Can I suggest a term?
Yes — [email protected]. The glossary grows from what people are actually shown in contracts.