Blanket Lien (UCC-1 Blanket Lien)

Category: legal

A legal claim giving a lender the right to seize all of a business’s assets if a loan default occurs.

A blanket lien covers everything—inventory, equipment, accounts receivable, intellectual property, and real estate. Lenders file a UCC-1 financing statement with the state to perfect this security interest, blocking the business from using those assets as collateral for other loans.

Common Examples

• By signing the line of credit agreement, the business granted the bank a blanket lien over all current and future inventory items.
• The startup had to negotiate a partial release of the blanket lien to allow their specialized hardware to be used for equipment financing.