By Kyle Sligar, Executive Vice President, Equipment Finance, with Mark Dubs, Executive Vice President, Business Development · October 2026
You have factored your receivables for two years without a problem. Then you buy a $1.2 million machine, the equipment lender files its paperwork, and a few weeks later your factor tells you it cannot fund the next batch of invoices. Nobody lied to you and nobody made a mistake. Two lenders simply filed claims on the same collateral, and the second one lost.
This is the most common and least discussed way a growing company damages its own cash flow. It is also almost entirely avoidable, if you know what to ask for before you sign.
What is a blanket lien?
When a lender advances money against equipment, it protects itself by filing a UCC-1 financing statement with the secretary of state in the state where your business is organized. That filing is public, it is cheap, and it is how a lender tells the world it has a claim on your property.
The question is what the filing covers. A specific filing describes the equipment itself: the make, the model, the serial number. A blanket filing describes “all assets of the debtor, now owned or hereafter acquired.” That language sweeps in your inventory, your bank accounts, your intellectual property and, critically, your accounts receivable.
A blanket lien is not predatory and it is not unusual. For a lender it is the cheapest available insurance, and most equipment lenders file one by default unless someone asks them not to. The problem is not the lender’s intent. The problem is that your receivables are now spoken for.
Why does your factor care about an equipment loan?
Because A/R funding is not a loan. When Integra funds an invoice, it is buying that receivable from you. A buyer needs clear title to what it is buying, in the same way a buyer of a truck needs a clean title before the money moves.
Priority between secured parties generally runs on a first-to-file-or-perfect basis. If an equipment lender filed a blanket lien in March and your factor files in June, the equipment lender’s claim on your accounts sits ahead of the factor’s. If your business later failed, that earlier filing would be paid from the receivables first, and the factor would be left behind it.
No factor will sit in second position on the very asset it is purchasing. This is not a matter of appetite or relationship. It is the whole basis of the facility.
How the conflict actually shows up
It almost never announces itself. It arrives in one of three ways.
You add equipment debt to an existing factoring facility. You close the equipment loan, the UCC-1 is filed, and at the next lien search your factor finds a new claim sitting ahead of its own. Funding pauses while the two lenders work it out.
You seek factoring while an equipment lender already has a blanket filing. Here the facility is simply never approved, and the reason you are given may be vague. A decline that sounds like it is about your customers or your industry is sometimes a lien problem nobody explained to you.
A renewal or an amendment triggers a fresh search. Facilities that have run smoothly for years get re-examined at renewal, and a filing made eighteen months ago surfaces then.
In all three cases the symptom is the same: the money stops at the exact moment you were counting on it, usually because you have just committed to a large purchase.
What is an intercreditor agreement?
It is a written agreement between two lenders setting out who has priority over what. In this situation it usually does two things: the equipment lender carves your accounts receivable and their proceeds out of its blanket filing, and the factor disclaims any interest in the financed equipment. Each lender keeps a clean first position in the collateral it actually cares about.
These agreements are routine and they are not controversial in principle. The difficulty is practical. Two credit committees have to agree, two sets of counsel have to review the language, and neither lender is in a hurry. How long that takes depends entirely on the two institutions involved.
Why it is so much easier before you sign
This is the part worth remembering, because the difference in leverage is enormous.
Before you sign, the equipment lender is competing for your business. A request to carve out accounts receivable at the term sheet stage is a negotiating point like any other, and for a lender whose collateral is the equipment, giving up a claim on your invoices often costs very little. Many will agree to it simply because they were asked.
After closing, the lender already has the loan and the filing. There is no deal to win. The request now has to go back through credit as an amendment, which means a committee, a legal review and no particular urgency. The same carve-out that would have been a sentence in a term sheet becomes a negotiation measured in weeks, with legal fees attached, and the answer can be no.
What to ask for before you sign equipment debt
Four things, none of which are difficult if you do them in the right order.
Ask the equipment lender to limit its filing. Request that the UCC-1 describe the financed equipment and its proceeds rather than all assets, or that accounts receivable be expressly excluded. Put it in writing at the term sheet stage, not at closing.
Tell your factor before you sign, not after. A factor told in advance can often coordinate directly with the equipment lender and have the language agreed before anything is filed. A factor told afterwards is doing damage control.
Run the lien search early. Know what is already filed against your business before you start, including old filings from lenders you paid off years ago that were never terminated. Stale filings are common and they cause real delays.
Have counsel read the security agreement. The collateral description is the clause that matters here, and it is usually two lines in a long document. This article is not legal advice, and a lawyer who reads these for a living will spot in five minutes what costs you five weeks later.
What if the filing is already there?
You have three routes, in rough order of difficulty.
Ask the equipment lender for a partial release or a subordination covering accounts receivable only. The lender keeps its first position in the equipment, which is what it underwrote, and the receivables are freed. Reasonable lenders often agree, because their collateral is untouched.
If the answer is no, consider refinancing the equipment debt with a lender willing to take an equipment-only position. You are not just chasing a different payment; you are buying back the use of your own receivables.
Or put both facilities in the same house, which removes the conflict rather than negotiating it.
How Integra approaches it
Integra does both. We fund receivables, and we finance equipment from $500,000 to $10 million through term loans, finance leases, sale-leasebacks and refinancing.
When both facilities are set up with Integra, the equipment lien and the receivables position are structured to work alongside each other from the start, by one team looking at one credit file. There is no second lender to persuade, because the conflict is designed out rather than negotiated away afterwards. Equipment financing is a loan or lease subject to credit approval, collateral review and documentation.
That is not an argument for moving everything to one lender in every case. It is an argument for making the lien question an explicit part of the decision before you sign, whoever you sign with.
Frequently asked questions
Does every equipment lender file a blanket lien?
No. Many file only against the financed equipment, particularly on larger transactions where the collateral is clearly identifiable. Others file blanket by default. You cannot tell which you are dealing with without asking or looking at the filing.
Can I factor receivables if I already have an SBA loan?
Often, yes, but it depends on the collateral language and the lender. SBA loans are typically secured broadly, so this is the same question in a different wrapper, and it is resolved the same way: a carve-out or a subordination covering accounts.
Does a factor take a lien on my equipment?
Generally the factor’s interest is in the accounts it is purchasing and their proceeds. In an intercreditor agreement a factor will usually disclaim the financed equipment expressly, which is one reason these agreements are easier than they sound.
How long does an intercreditor agreement take?
It depends on the two lenders, their counsel and their credit committees. It is not something either party can promise on the other’s behalf, which is exactly why handling it before closing is worth so much.
Will any of this change my pricing?
Terms on any facility are set at credit approval and depend on the transaction, the collateral and the credit. What a lien conflict reliably costs is time, and it arrives at the worst possible moment.
The bottom line
A blanket lien is a routine piece of lender housekeeping that quietly mortgages the asset your working capital depends on. The fix is a single clause in a term sheet, and it is nearly free before you sign and expensive afterwards. If you factor your receivables and you are about to finance equipment, raise it with both lenders before anyone files anything.
Key takeaways
- A blanket UCC-1 filed for an equipment loan usually covers your accounts receivable too.
- A/R funding is the purchase of invoices, not a loan, and a buyer needs clear title, so a factor cannot sit behind a prior filing on accounts.
- The conflict usually surfaces at a lien search, right when you have just committed to a large purchase.
- Ask for accounts to be carved out at the term sheet stage, when the lender is still competing for your business.
- Tell your factor before you sign, not after.
- If a filing already exists, a partial release, a refinance, or consolidating both facilities with one lender will all resolve it.
This article is general information about how secured lending works and is not legal advice. Collateral language varies and your own counsel should review any security agreement before you sign it. A/R funding is the purchase of accounts receivable and is not a loan. Equipment financing is a loan or lease subject to credit approval, collateral review and documentation.