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GLOSSARYTERMS AS A CREDIT DESK USES THEM

General security agreement (GSA)

What is a general security agreement, and what does it give the bank?

ONE OF 80 TERMS · FREE · NO SIGNUP

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED

// THE SHORT ANSWER

A general security agreement is a charge over all of a company's present and future assets — receivables, stock, plant, equipment and the proceeds of all of them — registered so that it ranks ahead of lenders who register later, though a supplier or equipment financier registered over the goods it financed can rank ahead of it on those goods. It is the usual security for a trading business's bank facilities in New Zealand and Australia; other markets reach the same place with a fixed and floating charge or a blanket lien. What it is worth to the bank is what those assets would realise in a failure, which is usually well below what the balance sheet shows.

BASIS  Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.

// WHAT IT IS NOT

Not a guarantee: it reaches the company's assets, not the owners'. The personal guarantee is a separate document that reaches outside the company.

// WORKED IN

// NEXT TO IT

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