A Floating Charge is a type of security interest over a company’s changing assets (like inventory or receivables) that allows the business to use those assets until default occurs.
A Floating Charge is commonly used by lenders to secure loans given to companies. Unlike a fixed charge (on specific assets), it covers assets that change over time, such as stock, cash, or receivables.
The company can freely use, sell, or replace these assets in normal business operations. However, if the company defaults, the floating charge “crystallizes” into a fixed charge, giving the lender control over those assets.
"A company takes a loan secured by its inventory. It continues selling and restocking goods, but if it defaults, the lender can claim those assets."