Blanket lien

Definition

One security interest covering every asset the business owns.

Why It Matters

An acquisition lender almost always takes one, and it is filed publicly as a UCC-1, so it shows up in any search a future lender or buyer runs. Two things follow. Equipment financing and a line of credit both become harder while it sits there, because a second lender has nothing left to secure against unless the first agrees to release or subordinate a piece. And when you sell, the lien has to be paid off and released at closing, which is why a payoff letter is on every closing checklist. Ask what it covers and what gets released as the balance falls.

In numbers: A $900k acquisition loan is usually secured by a blanket lien over 100% of the company's equipment, receivables, and inventory.