Floating Liens | Inventory Financing | Short Term Financing | Finance
A floating lien is a method of obtaining funds by pledging all types of inventories in general without specifying the current assets. Under floating liens, the lender has the right to lien all types of inventories in case of default of the loan. The borrower has full control of the inventories and is free to sell and replace these inventories.
Generally, the lender provides loans less than the value of inventories because it is difficult to identify inventories individually. A floating lien is requested only as additional protection and does not play a major role in determining whether or not the loan will be made.