A UCC filing is a legal notice a lender files with the secretary of state when they have a security interest against one of your assets. It gives notice that the lender has an interest, or lien, against the asset being used by you to secure the financing.

What is the purpose of a UCC-1?

A creditor files a UCC-1 to provide notice to interested parties that he or she has a security interest in a debtor’s personal property. This personal property is being used as collateral in some type of secured transaction, usually a loan or a lease.

Does a UCC filing hurt my credit?

How Does a UCC Filing Affect My Credit Score? Any UCC liens filed against your assets within the last five years will show up on your business credit report, which may affect your ability to borrow from other lenders. For example, the lender who files the claim will get first dibs on your assets.

What do UCC filings mean?

A UCC-Uniform Commercial Code-1 statement is a legal notice filed by creditors in an effort to publicly declare their right to seize assets of debtors who default on loans. UCC-1 notices are typically printed in local newspapers, in an effort to publicly express a lender’s intent to seize collateralized assets.

What do you need to know about a UCC-1 filing?

UCC-1 filings are used by lenders to announce their rights to collateral or liens on secured loans and are usually filed by lenders with your state’s secretary of state office when a loan is first originated.

What does it mean to file a UCC lien?

A UCC filing, also known as a UCC lien or a UCC-1, is a financing statement which lenders can file against your business with your secretary of state.

How does a UCC financing statement work for a small business?

If you’re approved for a small-business loan, a lender might file a UCC financing statement or a UCC-1 filing. This is just a legal form that allows for the lender to announce lien on a secured loan. This allows for the lender to seize, foreclose or even sell the underlying collateral if you fail to repay your loan.

Can a lender file a UCC-1 without a security agreement?

Lenders can’t file a UCC-1 without a security agreement from the borrower. A lender may file an initial statement only if the debtor allows the filing in an authenticated record or by authenticating a security agreement. If a lender issues a UCC-1 filing without borrower approval, its best to consult an attorney.