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Blanket lien
Also called all-asset lien, all assets filing, general lien.
A security interest over substantially everything the business owns, perfected by a UCC-1 financing statement covering all assets rather than named collateral.
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What it means
A blanket lien attaches to the whole pool: receivables, inventory, equipment, deposit accounts, general intangibles, and anything acquired later. It is perfected by filing a UCC-1 with the secretary of state where the business is organized, and it is public.
Priority runs from filing date, with narrow exceptions. The most important is the purchase-money security interest, which lets a lender financing a specific piece of equipment take priority in that item over an earlier blanket filing, provided the statutory steps are followed.
The practical effect on a small business is not seizure; it is blockage. A first-position all-assets filing means the next lender cannot get the position it needs. It will demand a subordination or intercreditor agreement from the incumbent, which the incumbent may simply refuse, or it will decline. A modest balance behind a blanket lien can therefore prevent a much larger, cheaper facility.
Cash advance funders file too. Some file narrowly, against future receivables only; many file all-assets. Either way the filing appears in a search and has to be dealt with by whoever comes next.
Where this one catches people
The lien does not disappear when you pay off the balance. It stays on the public record until a UCC-3 termination is filed, and the secured party has to file it. Businesses regularly discover a five-year-old filing from a repaid advance in the middle of an SBA closing. Ask for the termination in writing at payoff and verify it on the state filing system yourself.
Where you will meet this term
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Blanket lien — common questions
What does blanket lien mean?
A security interest over substantially everything the business owns, perfected by a UCC-1 financing statement covering all assets rather than named collateral.
Where does blanket lien catch people out?
The lien does not disappear when you pay off the balance. It stays on the public record until a UCC-3 termination is filed, and the secured party has to file it. Businesses regularly discover a five-year-old filing from a repaid advance in the middle of an SBA closing. Ask for the termination in writing at payoff and verify it on the state filing system yourself.
Is blanket lien the same as an interest rate?
Blanket 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 blanket lien apply to?
Merchant Cash Advance, Working Capital, Term Loan, Business Line of Credit, SBA Loan, Asset-Based Lending.
Is there a worked example of blanket 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 blanket lien?
Collateral, Cross-collateralization, Purchase-money security interest, Subordination, UCC termination.
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.