My bank has a blanket lien on all assets. Can I still get another loan?

Two documents stand in the way, not one

Most owners think of a blanket lien as the UCC-1 financing statement the bank filed with the state. That filing matters: it puts the world on notice and fixes the bank's place in line, so any lender that files after it stands behind the bank on every asset the filing describes. Paired with a security agreement that grants the same collateral, a filing that says "all assets" covers accounts receivable, inventory, equipment, general intangibles such as intellectual property, and the proceeds of all of them, including assets the business buys after the loan closed. Two gaps matter: titled vehicles need the lien noted on the title, and a lien on deposit accounts is perfected by control rather than by the filing, which the bank has automatically over accounts held with it. See what a blanket lien is for the definitions.

The second document is the one that stops most new loans: the loan agreement itself. Bank credit agreements carry negative covenants that limit additional debt and prohibit additional liens, usually with small permitted baskets. That means even an unsecured loan from someone else can put the business in default, and a default under one loan can trigger others through a cross-default clause. The question is rarely only "will a second lender accept second place?" It is also "does my existing agreement let me borrow at all?"

Read the debt and lien covenants in your current loan agreement before approaching anyone. A second loan that breaches them can put the first loan in default even if every payment is current.

What a blanket lien does not cover

A UCC filing covers personal property. It does not create a lien on real estate, which needs a recorded mortgage or deed of trust. If the business or its owner holds a building and the bank did not take a mortgage on it, the building may be unencumbered collateral a real estate lender or an SBA 504 refinance can lend against, subject to the debt covenants in the bank's agreement and any negative pledge, a promise not to grant liens on assets the bank did not take.

It also does not always cover what owners assume. Some filings describe specific collateral rather than all assets; an equipment lessor's filing normally covers only the leased equipment. And some filings belong to lenders who were paid off years ago and never filed a UCC-3 termination. A lien search at the start tells you which liens are live, which are stale and which are specific. Clearing a stale one is paperwork; see removing a UCC filing from a lender you paid off.

One more distinction: a lien filed by a cash-advance provider is still a lien. Merchant cash advance contracts typically carry a UCC filing over receivables or all assets, and taking a second advance behind one usually breaches an anti-stacking clause. The same logic applies to bank debt: the lender that files first decides what the second can do.

The three routes to new money

Before any of these, ask the bank for the money. An increase to an existing term loan or line is the simplest transaction there is: no new filings, no intercreditor, one set of covenants. If the bank says no, or offers less than the business needs, these are the routes that remain.

A full refinance does not need the bank's agreement, only its payoff letter, and it replaces the problem instead of negotiating around it. It is also the most work: a new lender underwrites the whole business, and the refinance has to be worth its costs. See moving your loans to a new bank, how payoff letters work and the refinance break-even.

A subordination keeps the bank in place and adds a junior lender. The junior lender agrees in an intercreditor agreement not to enforce its lien until the bank is paid or a standstill period passes, and often to receive payments only while the bank's loan is performing. Junior money is priced for that position; see when a second lien loan makes sense and subordination agreements.

A carve-out is the narrowest route and usually the easiest to agree, because it takes the least from the bank. Many credit agreements already permit purchase-money debt and equipment leases up to a stated limit. A purchase money security interest in equipment, perfected within 20 days after the business takes delivery, takes priority on that equipment even over an earlier all-asset filing. The PMSI settles who is first on the asset; it does not cure a breach of the bank's debt covenant, so the basket still has to fit. Real estate is carved out by nature if the bank never recorded a mortgage.

Which of these banks actually agree to

An existing lender judges every request by one test: does this leave me better or worse covered than today? The answers follow a predictable order.

• Being paid off. A bank rarely has a say here unless the note locks out prepayment; the only negotiation is the payoff figure, the notice period and any prepayment charge in the note. See how prepayment penalties work.
• Purchase-money equipment inside the basket. Commonly approved, often without a formal amendment, because the new lender is financing an asset the bank never lent against.
• A release of specific fixed assets. Negotiable when the bank's loan is well covered by what remains, especially if part of the new loan's proceeds pays the bank down. Banks look at collateral coverage after the release, not before.
• A junior lender behind them. Possible, but the bank will read the second loan's payments as a claim on the same cash flow that services its own loan. Expect the bank to ask for pro forma coverage with both loans in place; banks commonly look for at least 1.25x. Expect strict standstill and payment-blockage terms.
• Giving up receivables or inventory. Rare. For a bank with a line of credit, receivables and inventory are the borrowing base. Releasing them to someone else means shutting its own line. When a business needs an asset-based lender on its receivables, the answer is usually a refinance of the whole structure, not a carve-out.

Cash-advance providers sit at the far end of this spectrum. They rarely subordinate, because their product is priced on being first to the receipts. Where an advance holds the lien that is blocking a bank loan, the usual answer is to refinance the advances into term debt and file a termination at closing. See MCA refinancing.

How to put the request to the bank

A vague request for permission to borrow elsewhere gets a vague no. A specific request gets a real answer. Bring the bank:

• The amount, purpose and terms of the proposed new debt: lender type, rate basis, maturity, amortization and the collateral it will take.
• A pro forma showing debt service coverage with both loans in place, on the latest full year and year to date. See debt service coverage ratio.
• What the bank gives up and what it gains: a release of one asset against a paydown, or a junior lender whose money funds growth the bank's loan benefits from.
• For a junior loan, the key intercreditor terms the new lender will accept: payment subordination, standstill, and no cross-acceleration without the bank's consent.

The bank's answer tells you which route you are on. A counter-offer to lend more itself is often the best result. A flat refusal to subordinate, when the bank will not lend more either, is the clearest signal that a refinance into a new lender is the way through.

What a new lender will need

Whichever route you take, the new lender's first question is what sits ahead of it. Transparent's term-loan checklist is the starting file: P&L, year-to-date P&L through last month-end, balance sheet, debt schedule and, optionally, AP aging. For any refinance or junior loan add the existing loan agreement, the current payoff or balance, and a lien search, because the debt schedule and the UCC position together show the new lender exactly which covenants it has to work around.

Where lines are involved, the line-of-credit checklist adds the AR aging by customer, AP aging and an inventory report if inventory is in the borrowing base. See how a blanket lien affects a new line of credit and how an ABL revolver and a term loan share collateral. Transparent's book holds 1,800+ lenders, and the route depends on which of them will accept the position on offer; see how we underwrite.