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Second position 2nd position
Also called 2nd position, junior position, second lien.
A claim on the same collateral that ranks behind an existing one, so it is paid only after the senior claim is satisfied — and in advance-market usage, shorthand for a deal taken on top of an outstanding advance.
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
Priority in secured lending is generally decided by who filed or perfected first, so a second UCC-1 against the same collateral is junior to the first by operation of the filing dates rather than by anything either party negotiated. On liquidation, the senior claim is satisfied out of collateral proceeds before the junior sees anything.
In the advance market the phrase carries a second meaning: a funder who knowingly writes behind an existing advance. Those funders price for the position. Terms shorten, the factor rises, and the daily debit is layered on top of the one already running. Third and fourth position deals exist and follow the same logic, more severely.
A junior funder can improve its actual recovery position without changing its filing date — by requiring an inter-creditor or subordination agreement, by taking additional collateral, or by controlling the deposit account. Filing order and practical recovery are related but not identical.
Where this one catches people
Owners hear "second position" as a description of the lender and not of themselves. What it describes is the fact that two separate contracts now have a claim on the same receipts. The senior agreement very likely prohibits exactly this, which means accepting a second-position offer is frequently a default under the first agreement on the day it funds — regardless of whether every payment is made on time.
Where you will meet this term
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Second position — common questions
What does second position mean?
A claim on the same collateral that ranks behind an existing one, so it is paid only after the senior claim is satisfied — and in advance-market usage, shorthand for a deal taken on top of an outstanding advance.
Where does second position catch people out?
Owners hear "second position" as a description of the lender and not of themselves. What it describes is the fact that two separate contracts now have a claim on the same receipts. The senior agreement very likely prohibits exactly this, which means accepting a second-position offer is frequently a default under the first agreement on the day it funds — regardless of whether every payment is made on time.
Is second position the same as an interest rate?
Second position 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 second position apply to?
Merchant Cash Advance, Working Capital.
Is there a worked example of second position?
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 second position?
First position, Lien position, Senior lien, Stacking, Subordination.
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.