Guides
UCC filing guide for MCA and commercial lenders
When and where to file
Under Article 9 of the Uniform Commercial Code, a UCC-1 financing statement is filed in the state where the debtor organization is incorporated or formed — not necessarily where the business operates. For an LLC or corporation, file in the state of formation (usually discoverable from the secretary of state website). For a sole proprietor, file in the state where the individual resides.
Filing is done with the secretary of state's office, either online (most states offer online filing portals) or by paper. Fees vary by state, typically ranging from $5 to $50 per filing. The filing becomes effective immediately upon acceptance. Keep a copy of the filed UCC-1 and the filing confirmation in the deal case file.
How to search existing UCC filings
UCC searches are conducted through the secretary of state's office in the debtor's state of organization. Most states offer online search portals. Search by the debtor's exact legal name (using the name as it appears on the secretary of state formation documents) and by EIN where available — name variations can miss filings if the name is not exact.
Review all UCC-1s returned: note the secured party name, the collateral description, and the filing date. Multiple UCC-1s with broad collateral descriptions (all assets, all accounts receivable) from different funders indicate stacking and suggest the merchant's assets are encumbered. A single first-position UCC-1 from a single funder indicates one existing secured interest — evaluate whether that funder's collateral description includes the receivables you are purchasing.
Managing your UCC portfolio
UCC-1 financing statements are effective for five years from filing and must be continued (via a UCC-3 continuation statement) before expiration to maintain priority. For MCA deals, most advances are repaid within months, so continuation is typically not needed — but for longer-duration positions, a process to flag upcoming expirations is important.
When an advance is fully repaid, best practice is to file a UCC-3 termination statement to release the security interest. This keeps the public record clean, which benefits merchants and signals responsible funder practice — an increasingly important factor in relationships with capital partners and data bureaus.
FAQ
UCC filing guide for funders — common questions
Does every MCA funder need to file a UCC?
Filing is not legally required — it is optional. But filing a UCC-1 is standard practice because it (a) establishes the funder's legal priority over subsequent creditors, (b) creates a public notice that deters merchants from stacking without disclosure, and (c) enables post-default enforcement actions against collateral. Funders who do not file have fewer post-default options.
What collateral description should MCA funders use in a UCC-1?
MCA funders typically use a broad collateral description — 'all assets' or 'all accounts receivable and future receivables of the debtor' — to capture the receivables being purchased. The specific language should be reviewed by counsel to ensure it accurately describes the collateral and is consistent with the MCA agreement's characterization of the transaction.
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