Floating Charge

A floating charge is a type of security that can be used to secure a loan. It is a type of charge that attaches to all of the assets of a company, both present and future. This means that if the company goes into liquidation, the floating charge holder will be able to claim all of the assets of the company, even if they were acquired after the loan was made.

Floating charges are often used by companies that are in a high-growth phase. This is because they allow the company to borrow money without having to give up control of their assets. However, floating charges can also be risky for lenders, as they can be difficult to enforce if the company goes into liquidation.

There are two main types of floating charges:

• A general floating charge is a charge that attaches to all of the assets of a company, both present and future.
• A specific floating charge is a charge that attaches to a specific class of assets, such as inventory or receivables.

Floating charges are often used in conjunction with other types of security, such as fixed charges. This can help to protect the lender in the event that the company goes into liquidation.

Floating charges are a complex financial instrument, and it is important to seek professional advice before using them.