UCC filing: what it is and how it affects your business

A Uniform Commercial Code declaration, also known as a UCC declaration, is a document used by lenders to establish legal title to the assets a borrower uses to secure a loan. This notice allows the lender to seize the borrower's collateral in case of default.

A UCC filing can target specific collateral, or a lender can file a blanket lien that applies to all of the borrower's assets. Filing a UCC lien is a common practice among lenders upon issuance. small business loans.

A UCC filing is an official notice that a lender uses to indicate that it has a security interest in a borrower's assets or real estate. A UCC filing establishes a lien against: collateral Borrowers use it to secure their loans. This gives the lender the first right to claim the collateral as repayment in the event of default.

UCC liens are typically filed using a UCC financial statement, also known as a UCC-1 financial statement.

This document is filed with the Secretary of State's office in the state where the business (or borrower) is located. The UCC-1 financial statement identifies the assets or real estate claimed by the lender and informs other creditors of their security interest in the collateral.

UCC liens can be filed against a variety of personal and/or business assets, including but not limited to real property, inventory, accounts receivable, vehicles, machinery and equipment.

Once a UCC lien is filed with the Secretary of State's Office, it becomes public record and anyone can access it online. Search for active applications.

Although the details vary by state, UCC filings typically last five years. If the loan is still active after that period, the lender can apply to continue the lien. Lenders can also submit amendments or additions to the statement if necessary.

Just having a UCC lien isn't bad for your business. This serves to formally notify other creditors that your lender has a security interest in one or all of your assets. However, if you fall behind on your business loan or need additional funds, applying for UCC can affect you in a number of ways.

your corporate credit report You'll see UCC filings made against your business over the past five years. These liens usually do not affect your business. business credit score. However, late payments or defaulting on your loan can negatively impact your credit.

When a lender files a UCC lien, some or all of your property (depending on the type of lien) is at risk if you fail to repay your loan. As long as you pay back your lender, your assets are safe. On the other hand, if you don't repay your loan, your lender may seize your assets to recoup their losses.

The UCC filing indicates that the lender has first claim to the collateral in the event of default. If you decide to apply for additional financing, the new lender can search to see if your business has any liens. Lenders are often reluctant to take a second position on a company's assets and may deny you a loan. Application for business loan If you have a valid UCC application — or we will provide you with limited funding —.

There are two types of UCC applications that can be used to secure a business loan. The UCC filings used by lenders can vary based on a variety of factors, including: Types of business loansthe company's qualifications, and the private lender itself.

Lenders can file UCC liens against certain collateral, such as real property or equipment.If you Business loan delinquencylenders can claim these assets to recover their losses, but not other company assets.

Specific collateral liens tend to be used for special purpose loans such as: equipment financing or inventory financing. If you have an existing lien on a particular asset, it may be difficult to use that same asset as collateral for a future loan.

Blanket liens do not require specific collateral, but instead cover all of a company's assets, including accounts receivable, equipment, vehicles, inventory, etc. If you default on your loan, your lender can claim (or sell) any assets it needs to make up for its losses.

Blanket liens are often used for standard bank loans. SBA loan And online loans.

Only the lienholder (lender) can remove a UCC lien, and typically only after the loan is repaid. UCC liens are typically valid for five years. If the loan term extends beyond that, the lender may choose to renew the lien. If he repays the loan before the five years are up, his UCC application for that loan will remain active until removed.

You can remove your UCC application by asking your lender to file a UCC-3 form to terminate the lien. If you find a UCC lien on your credit report that shouldn't exist, dispute it with the Secretary of State's office or a credit reporting agency (such as Experian or Dun & Bradstreet) to have it removed. can do. You'll likely need to provide proof that you've repaid the loan and take an oath that you're telling the truth.