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Sweep
Also called cash sweep, lockbox sweep, cash dominion.
Automatic movement of collected funds from a designated account to the lender, applied against the outstanding balance as receipts arrive rather than on a payment schedule.
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
In asset-based lending and factoring the customary structure is a blocked or lockbox account. Customer payments go there, and the balance is swept daily to the lender, which applies it to the loan and, in a revolver, makes availability available to be drawn again. The borrower funds operations by requesting advances against the borrowing base, not by holding its own collections.
Cash dominion describes the control regime around it. Full dominion means the sweep runs from day one. Springing dominion means the borrower keeps its collections until a trigger — a covenant breach, an availability threshold, an event of default — after which the lender takes control. That trigger clause deserves as much attention as the pricing, because it determines when the business stops controlling its own bank account.
The term also has an unrelated benign meaning in commercial banking: an automated overnight transfer between operating and interest-bearing accounts. Context distinguishes them.
Where this one catches people
Springing cash dominion reads as a remote contingency during negotiation and is frequently the clause that actually ends the business's independence. It usually springs on a measure the borrower will breach precisely when it is under stress — the moment when losing control of incoming cash is least survivable. Read the trigger, not the assurance that it never gets used.
Where you will meet this term
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Sweep — common questions
What does sweep mean?
Automatic movement of collected funds from a designated account to the lender, applied against the outstanding balance as receipts arrive rather than on a payment schedule.
Where does sweep catch people out?
Springing cash dominion reads as a remote contingency during negotiation and is frequently the clause that actually ends the business's independence. It usually springs on a measure the borrower will breach precisely when it is under stress — the moment when losing control of incoming cash is least survivable. Read the trigger, not the assurance that it never gets used.
Is sweep the same as an interest rate?
Sweep 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 sweep apply to?
Business Line of Credit, Invoice Financing, Asset-Based Lending.
Is there a worked example of sweep?
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 sweep?
Borrowing base, Covenant, Lockbox, Reserve, Setoff.
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.