We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What is a Blanket Lien?

Malcolm Tatum
By
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Sometimes referred to as an all-assets lien, the blanket lien is an entitlement that is granted to a creditor as security for repayment of loans or other resources that are extended to a debtor. The blanket lien is unique in that it allows the creditor access to all assets that are owned by the debtor in the event of a default on the loan agreement.

The purpose of the blanket lien is to allow individuals and businesses that wish to pledge multiple assets as collateral for loans to obtain financial assistance. Unlike a lien agreement on a vehicle, which usually allows the creditor the right to repossess the vehicle in the event of the debtor failing to make regular payments on the debt, a blanket lien goes much further. At the discretion of the creditor, any of the items listed as a security interest for the loan may be called upon to retire the remaining debt on the defaulted loan. The debtor has no say in which of the pledged collateral may be collected and used to settle the debt.

Blanket liens are usually structured in one of two ways. The most common method is to include an itemized listing of all assets that are being used as collateral, with specific verbiage that allows the creditor to assume control of any or all of those assets in order to retire the debt. There are some instances where a blanket lien is written to allow a creditor to go after other assets owned by the debtor, in the event that the market value of the pledged assets does not equal the amount of indebtedness that remains on the loan.

Businesses tend to utilize the blanket lien as a means of securing short term financing for an upcoming expansion or business related project, making use of assets that are in the possession of the company, but not necessarily essential to the central operation. By using collateral that is peripheral to the business, the debtor ensures that the business will continue, even if unforeseen circumstances delay or destroy the expansion. At the same time, the creditor is still assured of repayment, through the sale of the items listed in the blanket lien.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Malcolm Tatum
By Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including SmartCapitalMind, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.
Discussion Comments
By anon174936 — On May 11, 2011

How can a blanket lien work at, let's say, a car or heavy equipment sales operation? If you sell a car/truck/bulldozer etc. that is covered under a blanket lien and you default on a loan, can the bank then repo the car that you sold to a customer? How can you protect yourself if something is covered under a blanket lien and you are unaware of it?

By anon44758 — On Sep 10, 2009

How would I know if I have a blanket lien? Would it be recorded at the court house? Would I receive legal papers via hand delivery or mail? How can I protect myself from a blanket lien being attached to all property I will buy in the future or open a business?

By anon21980 — On Nov 25, 2008

How can a blanket lien work at, let's say, a car or heavy equipment sales operation? If you sell a car/truck/bulldozer etc. that is covered under a blanket lien and you default on a loan, can the bank then repo the car that you sold to a customer? How can you protect yourself if something is covered under a blanket lien and you are unaware of it?

Malcolm Tatum
Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
Learn more
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.