What a UCC filing is
It is a record, made under the Uniform Commercial Code, that gives public notice of a creditor's claim on assets of a borrower.
The Uniform Commercial Code is a set of rules, adopted with local variations in every state, that governs many commercial transactions. When a lender takes a security interest in your assets, it files a financing statement, usually called a UCC-1, with the state, typically the secretary of state's office, where the business is organized.
The filing is public. Anyone can search it. That is the point: a later lender can see that someone else already has a claim. For the filing itself, see our page on the UCC-1 lien.
What the filing can cover
It covers whatever collateral is described in the security agreement and the filing, ranging from one piece of equipment to all business assets.
- Specific collateral: a named truck, machine or piece of inventory.
- Blanket lien: all current and future business assets, including accounts, inventory, equipment and receivables.
- Future assets: many agreements reach assets you buy later.
Read the collateral description carefully. A blanket filing can make it harder to get a second loan because a new lender may be behind the first one.
As a rule, the narrower the collateral, the more flexible you stay. Ask lenders whether a filing on only the funded asset would be acceptable.
How long a filing lasts
Under the common state rules a filing lasts five years and can be continued within a window before it expires.
A financing statement generally stays effective for five years unless it is continued by a filing made in the six months before it lapses. Rules vary by state, so confirm with your state filing office or an attorney. A filing that is not continued can lapse, but a lender who wants to keep its claim usually files a continuation.
If you move your business to another state or change its legal name, filings may need to be updated, so ask your lender how it will handle it.
How to check what is filed against you
Search your state's UCC database, usually through the secretary of state, using your exact legal business name.
Most states let you search online, often for a small fee. Search under the exact name on your formation documents, since a misspelling can hide results. Make a list of every filing, the secured party and the collateral. Compare it with the debts you actually owe. Old filings from loans you repaid should be removed.
Removing a UCC filing after you pay off a loan
Once a debt is paid, ask the lender to file a termination statement. If they do not, you may have legal ways to compel it.
This is often overlooked. After payoff, send a written request to the secured party asking for a UCC-3 termination filing. Keep proof of payoff. If a lender ignores the request, the UCC provides a process for a debtor to demand termination, so consult an attorney about timing and requirements in your state.
A leftover filing can mislead other lenders, and cleaning it up helps your next application.
How UCC filings affect getting more funding
A first-position lien can limit new financing, and a new funder may ask for a payoff or a subordination agreement.
When you apply for funding, expect questions about existing liens. A lender behind another lender's blanket lien takes more risk. Some will not fund, some will fund at a higher cost, and some will ask the first lender to agree to share or step back. Knowing your own filings in advance, and having payoff letters ready, speeds up the process. Our overview of UCC filings on business loans has more examples.
What this means when you work with ROI Funder
Tell us about existing filings when you apply. We match your file to funders that fit it.
ROI Funder works with a network of funders, and each has its own approach to liens and positions. Some products, such as working capital, may involve a UCC filing, while others do not. Ask for each offer to state exactly what is being filed and on what assets. Applying takes a few minutes and uses a soft credit pull.
Common mistakes owners make with UCC filings
Most problems come from not looking: owners often do not know what is filed under their name until a lender finds it.
The usual errors are signing a blanket lien without noticing, failing to request a termination after payoff, and using a different business name than the one on record. A mismatch between the filed name and your legal name can cause confusion in future searches. Set a yearly reminder to search your state record, keep payoff letters in one folder and confirm that equipment liens are removed when you sell the equipment.
Frequently asked questions
Does a UCC filing hurt my credit score?
A filing is not a credit report entry by itself, but the underlying debt may be reported. Its main effect is on other lenders' view of your assets.
Can I get a loan with an existing UCC lien?
Often yes. The new funder will consider where it stands in line, and may require a payoff or subordination.
Who files the UCC-1?
The lender or secured party files it, usually after you sign the security agreement.
Is a UCC filing the same as a judgment?
No. A UCC filing records a security interest you agreed to. A judgment comes from a court after a legal dispute.
How much does it cost to search UCC filings?
Many state offices charge a small fee for a search or copies, and some offer online lookups. Check your state's filing office.