Glossary

What is a UCC filing?

A UCC filing (UCC-1 financing statement) is a document a lender or funder files with a state secretary of state's office to publicly assert a security interest in a borrower's assets. In MCA, funders typically file a UCC-1 with a blanket lien on the merchant's business assets to establish their legal interest in the purchased receivables and protect their position relative to other creditors.

How UCC filings work

A UCC-1 financing statement is filed in the state where the debtor is organized (or where an individual debtor resides). It names the secured party (the lender or funder), the debtor (the borrower or merchant), and describes the collateral subject to the security interest. The filing is public record and can be searched by any party evaluating the debtor's existing obligations.

In MCA, the collateral description in a UCC-1 is typically broad — 'all assets' or 'all accounts receivable' — reflecting the nature of a receivables purchase. The filing does not mean the funder owns the business's assets outright; it establishes the funder's priority claim if the debtor defaults or enters insolvency.

UCC filings as a stacking detection tool

Because MCA funders routinely file UCC-1s, a UCC search against a merchant's business name and EIN surfaces existing secured positions — making it a practical tool for detecting stacking before funding. A merchant with multiple UCC-1s filed by different funders has almost certainly stacked, even if the bank statements do not yet show overlapping remittances.

FAQ

UCC Filing — common questions

How long does a UCC filing last?

A UCC-1 financing statement is effective for five years from the filing date. The secured party must file a continuation statement before the five-year period expires to maintain the security interest. Failure to continue results in the interest lapsing and losing priority.

Do MCA funders always file UCCs?

Not always — filing practice varies by funder and deal size. But filing a UCC-1 is standard practice for most MCA funders as it establishes a legal record of the secured interest, provides notice to subsequent creditors, and supports collections actions in the event of default.

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