UCC Filing (UCC-1)
Definition
A UCC (Uniform Commercial Code) filing, specifically a UCC-1 Financing Statement, is a legal document filed by a lender to establish a security interest in a borrower's assets. When a business takes out a loan or MCA, the lender typically files a UCC-1 with the state, giving public notice that they have a claim on the business's assets (inventory, equipment, accounts receivable, etc.). UCC filings can be specific (covering only certain named assets) or blanket (covering all business assets). Multiple UCC filings can exist simultaneously — the first filed lender generally has first priority in the event of default.
Example
When a business receives a $100,000 MCA, the funder files a blanket UCC-1 covering all business assets. If the business later applies for equipment financing, the equipment lender sees the existing UCC filing and may require a subordination agreement or limit their advance amount.
Related Terms
Merchant Cash Advance (MCA)
A merchant cash advance is a financing arrangement where a business receives a lump sum of capital i...
Stacking
Stacking refers to the practice of taking out multiple merchant cash advances or business loans simu...
Advance Rate
The advance rate is the percentage of an asset's value or a business's monthly revenue that a lender...
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