Blanket Lien: Meaning in a Merchant Cash Advance
A blanket lien is a claim that covers all or nearly all of a business's assets rather than one specific item. It gives the secured party a broad right against inventory, equipment, accounts, cash and other property listed on the filing.
What does blanket lien mean?
A narrow lien names one thing, like a truck or an oven. A blanket lien names everything. On a UCC-1 form it often reads "all assets of the debtor, now owned or hereafter acquired." Bank lines of credit and SBA loans commonly take blanket liens. Some merchant cash advance contracts describe collateral this broadly too, even though the funder's main interest is the receivables it bought.
Why does blanket lien matter to your business?
Only one creditor can sit first on a given asset. If a bank already holds a blanket lien, a new funder knows it stands behind that bank on everything. Some funders won't write an advance at all when a bank's blanket lien is on file, and some banks treat a later MCA filing as a breach of their loan terms. Before signing anything new, find out who already holds a broad claim.
Can a blanket lien be narrowed?
Sometimes. Ask the funder to file against specific collateral, such as receivables, instead of all assets, especially if a bank loan or equipment financing is in your plans. Funders agree to that less often than they agree to subordinate, so ask before you sign.
Where will you see it?
In the collateral description on a UCC-1 search result. In a bank loan agreement's security section. In an MCA contract's security interest clause, where "all assets" language sometimes appears next to the receivables purchase.
What should you ask?
- Does the filing cover all assets or only accounts and receivables?
- Does my bank loan allow a second filing against my receivables?
- Will this funder narrow the description if I ask?
Is this legal advice?
This is general information, not legal advice. Lien priority and what counts as a breach of an existing loan depend on the documents and on state law.
Which terms are related to blanket lien?
The full list is in the glossary. Owners ask about this in How do I find UCC filings on my business?.
A term on your offer you don't recognize?
Send us the line and we'll tell you what it means. Call 877-FUND-654 with any question. We call you back, usually the same business day, and we always talk with you before we shop your file.