Understanding UCC filings helps you know what lenders are doing when they secure business loans.
A UCC filing (Uniform Commercial Code filing) is a public notice that a lender has a security interest in your business assets. It's filed with your state to establish the lender's legal claim to your assets if you default on the loan. UCC filings are standard for secured business loans and don't prevent you from using your assets—they just give the lender priority if you default. Most business loans require UCC filings on assets like equipment, inventory, or accounts receivable.
When you get a secured loan, the lender files a UCC-1 financing statement with your state's secretary of state office. This creates a public record of their security interest.
The filing doesn't prevent you from using your equipment, inventory, or other assets. You continue operating your business normally as long as you make payments.
If you default, the lender has legal priority to seize and sell the assets listed in the UCC filing to recover the loan amount. Other creditors come after the secured lender.
Once you pay off the loan, the lender files a UCC-3 termination statement to release the lien. The filing is removed from public records.
UCC filings can cover various business assets:
The initial filing that establishes the lender's security interest. Most common type, filed when you get a secured loan.
Used to modify an existing UCC-1 filing (change collateral, extend term, etc.).
Filed when the loan is paid off to release the lien and remove it from public records.
No, UCC filings don't appear on your credit report and don't affect your credit score. They're public records but separate from credit reporting.
Yes, but other lenders will see the existing lien. They may require the first lender's permission or file a second-position lien (which has lower priority). Learn more about how to qualify for business loans.
UCC-1 filings are valid for 5 years. Lenders can renew them before expiration. Once the loan is paid off, the lender should file a termination within 20 days.
Only the lender can file a termination. If you pay off the loan early, request a UCC-3 termination statement. If the lender doesn't file it, you can file it yourself with proof the loan is paid.
Learn about loans secured by business assets (which require UCC filings).
Understand loan requirements including UCC filings.
Equipment loans typically require UCC filings on the equipment.
Compare loan options and understand their requirements.
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