Floating Lien
Definition of 'Floating Lien'A legal claim placed on a set of assets rather than on a single asset. A floating lien is used when the smaller components of the general asset can change over time, such as in the case of the outstanding balances in a company's accounts receivable. A bank making a loan secured by a floating lien will have an interest in the set of company assets when the lien is placed, as well as additions to that asset set over time. |
|
Investopedia explains 'Floating Lien'An example of this type of legal claim would be a floating lien placed on a company's inventory. Over time the amount of inventory may increase, and the floating lien is designed to cover the additional acquisitions. If the company goes into default, the value of the floating lien becomes a fixed charge, which gives the lender priority as a creditor. |
Related Definitions
Articles Of Interest
-
Warning Signs Of A Company In Trouble
Don't let your clients go down with ship! Learn how to escape sinking with these tips. -
The Pitfalls Of Buying A Foreclosure House
Find out if the house you're eyeing is really a good deal. -
10 Worst First-Time Homebuyer Mistakes
These errors could wind up costing you more than the coveted key to your first home. -
Purchasing A Short-Sale Property
If you are looking for a good deal and have time to wait, a short-sale house may be for you. -
The Pros And Cons Of Small Business Credit Cards
Business owners have many financial tools at their disposal. Should a credit card be one of them? -
Holding Titles On Real Property
Find out how best to claim and convey ownership on your assets. -
Depreciation: Straight-Line Vs. Double-Declining Methods
Appreciate the different methods used to describe how book value is "used up". -
Financial Career Options For Professionals
Find out if spreading your wings to try a new career will make you soar or fall flat. -
Financial Statement: Extraordinary Vs. Nonrecurring Items
When it comes to analyzing a company, successful analysts spend considerable time differentiating between accounting items that are likely to recur going forward from those that most likely will ... -
Get A Career In Showbiz Accounting
An accounting career doesn't have to be boring. If you love numbers, but want excitement as well, consider the field of showbiz accounting.
Free Annual Reports