A UCC filing is a public notice a lender files when you use business assets as collateral for a loan. It's a standard part of secured financing and shows that a lender has a security interest in your property.
This notice is filed with the Secretary of State under the rules of the Uniform Commercial Code (UCC). It's not a sign of financial trouble; it's a routine step that makes the lending process transparent and secures the lender's investment. It tells other potential creditors that certain assets are already pledged.
A UCC filing includes details on the debtor (your business), the secured party (the lender), and the collateral. There are two common types:
- Specific Collateral Lien: This covers a particular asset, like a piece of equipment you financed.
- Blanket Lien: This is broader and covers all business assets, such as inventory and accounts receivable.
Even with an existing UCC filing, you can often get more funding. A new lender might take a "second position" lien, agreeing to be second in line for repayment.
A UCC-1 filing is valid for five years but can be extended with a continuation statement. Once the loan is paid off, the lender should file a UCC-3 termination to release the lien. It's important to verify this has been done to keep your business records clean.
You can search for UCC filings on your state's Secretary of State website. Reviewing these records helps you understand your financial standing before seeking new capital.
Navigating UCC filings can be tricky. At FSE, we help businesses find funding solutions, even with existing liens. Apply today to get expert guidance.