- A general security agreement is a contract in which a borrower grants a lender a security interest in some or all of its personal property, as collateral for a loan.
- Because a GSA is typically drafted to cover "all present and after-acquired personal property," it's broader than the equipment-only or receivables-only security some more narrowly…
- Registration under the PPSA does two things for the lender: 1.
If a lender is financing part of your business purchase, it will almost certainly ask you (or your corporation) to sign a general security agreement, or GSA. It's one of the most common documents in Ontario commercial lending, but buyers signing one for the first time often don't fully understand what it actually covers — or why the lender registers it publicly against the business's assets.
What a GSA Is
A general security agreement is a contract in which a borrower grants a lender a security interest in some or all of its personal property, as collateral for a loan. "Personal property" here is a legal term covering essentially everything that isn't land — equipment, inventory, accounts receivable, intellectual property, and (usually) property the business acquires in the future, not just what it owns on the day the loan is signed.
The GSA itself is a contract between borrower and lender. To make that security interest effective against other creditors (not just the borrower), the lender registers it under Ontario's Personal Property Security Act (PPSA) — a public registry that establishes priority among competing claims to the same collateral.
What a GSA Typically Covers
| Included as collateral | Generally not covered by a GSA |
|---|---|
| Equipment and machinery | Real property (land and buildings — secured separately by a mortgage/charge) |
| Inventory | Assets specifically excluded by the agreement's own terms |
| Accounts receivable | Personal assets of an individual guarantor (covered instead by the guarantee itself) |
| Intellectual property | Property already subject to a prior, higher-priority registered security interest, unless subordinated |
| After-acquired property (assets the business acquires later) |
Because a GSA is typically drafted to cover "all present and after-acquired personal property," it's broader than the equipment-only or receivables-only security some more narrowly tailored facilities use.
Why the Lender Registers It
Registration under the PPSA does two things for the lender:
- Perfection. An unregistered security interest can still be valid between the borrower and lender, but registration is generally what makes it enforceable against other creditors and a bankruptcy trustee — this is what lenders mean by "perfecting" their security.
- Priority. The PPSA generally establishes priority among competing security interests in the same collateral based on registration timing and type, subject to specific statutory exceptions. A lender wants to register promptly, at or immediately after closing, to secure its priority position ahead of any later creditor.
This is also why a buyer's own PPSA search before closing matters — it reveals whether the seller's assets are already subject to someone else's registered security interest that needs to be paid out and discharged before your lender will be comfortable taking first priority.
How a GSA Interacts With a Vendor Take-Back
Where the seller is also financing part of the purchase price through a vendor take-back (VTB), that seller typically wants its own PPSA registration against the purchased assets as security. This creates a priority question: does the buyer's third-party lender or the VTB seller register (and therefore rank) first?
This is usually resolved through a subordination or priority agreement — the seller agreeing that its security interest ranks behind the buyer's primary lender's GSA, in exchange for whatever commercial terms the seller negotiated for accepting that subordinate position. This is a standard feature of deals involving both bank financing and seller financing, not a sign that something is unusual about the transaction.
Practical Costs to Expect
Ontario PPSA registrations, amendments, discharges, and searches carry government filing fees that are relatively modest compared to the loan amounts involved, though figures change and should always be verified before you rely on them — as of mid-2026, government-set fees for these PPSA filings were in the range of roughly $8 to $12 per registration, amendment, or search action, with discharges filed at no cost. Confirm the current fee schedule directly before assuming any specific number.
Frequently asked questions
Does signing a GSA mean the lender can seize my personal assets?
No — a GSA is security against the borrower's own property (typically the business's assets, or a holding company's assets, depending on how the loan is structured). Your personal assets are only exposed if you've separately signed a personal guarantee, which is a different document with a different legal effect.
Can I negotiate what's included in a GSA?
To some extent — a lender's standard GSA form often covers all present and after-acquired personal property, but specific carve-outs (excluding a particular asset, or limiting the security to certain categories of property) can sometimes be negotiated, particularly with smaller lenders or where another creditor already has a legitimate prior claim.
Does a GSA expire?
A GSA as a contract generally continues for as long as the underlying loan is outstanding, and the related PPSA registration is filed for a specific term (which can be renewed). Once the loan is repaid, you're generally entitled to have the registration discharged — this doesn't happen automatically and is worth confirming was actually done.
What's the difference between a GSA and equipment-specific security?
A GSA is broad — covering essentially all present and after-acquired personal property of the borrower — while equipment-specific security is narrower, covering only the identified equipment. Lenders sometimes use both together, or a GSA alone, depending on the size and structure of the loan.
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