What is the difference between a specific security agreement and a general security agreement?

A specific security agreement limits the collateral to a defined asset or category — for example, one piece of equipment, a vehicle, or a particular contract right — rather than covering the corporation's assets broadly. It's commonly used when financing is tied directly to a particular purchase, such as equipment or vendor financing, where the lender only needs, and only wants, security in that one thing.

A general security agreement, by contrast, covers essentially all of the corporation's present and after-acquired personal property in a single document, and is the standard approach for a corporation's main operating lender, such as a bank providing a credit facility or term loan tied to the business as a whole rather than to any one asset. A corporation can have both in place at once, and often does — a general security agreement with its principal lender, and one or more specific security agreements with equipment suppliers or specialty lenders financing particular assets, with Ontario's PPSA priority rules, including the purchase-money security interest exception, sorting out how those different interests rank against each other over the same collateral.