Lien Priority: Meaning in a Merchant Cash Advance
Lien priority is the order in which creditors with claims on the same asset get paid. Under the UCC, the general rule is first to file or perfect is first in line, though some kinds of claims, like certain tax liens, can jump ahead.
What does lien priority mean?
Picture a line of creditors all pointing at your receivables. The one who filed first stands at the front. If the business can't pay everyone, the front of the line gets paid in full before the next one sees anything. In the MCA world, this is related to but not the same as the "position" of an advance. Position counts how many advances you have open; lien priority is the legal order of claims.
Why does lien priority matter to your business?
A funder asked to write a second advance knows it will stand behind the first filing. That affects how much it offers and at what price. A bank with an older blanket lien will often object to anything that competes with its claim. When you consolidate, the new funder usually wants the old filings terminated so that it takes the front of the line.
What changes lien priority?
- A subordination agreement, signed by the earlier creditor.
- A tax lien, which follows its own rules and can outrank earlier filings in some cases.
- A lapse, when a filing isn't continued on time and drops out of line.
Where will you see it?
In lien search results, where filing dates set the order. In subordination or intercreditor agreements, where one creditor agrees to stand behind another. In offer terms for second and third position advances.
Is this legal advice?
This is general information, not legal advice. Priority disputes turn on exact filing dates, documents and state law.
Which terms are related to lien priority?
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.