What Is a UCC Filing and Why Does It Matter for Business Loans?

If you've taken a business loan or lease, there's likely a UCC filing against your business. Most business owners have no idea this exists until it shows up in a lender's search during a new loan application. Understanding UCC filings prevents surprises and helps you manage your borrowing capacity.

What a UCC Filing Is

UCC stands for Uniform Commercial Code — a set of laws governing commercial transactions that applies in all 50 states. A UCC-1 financing statement is a public document filed by a lender with the Secretary of State in your state, declaring that they have a security interest in specific assets of your business (or all business assets, in the case of a blanket lien).

Filing a UCC-1 is how a lender establishes priority over other creditors. If your business fails and multiple lenders have claims, the lender with the first-filed UCC-1 gets paid first — which is why lenders file them routinely for most business loan products.

How UCC Filings Affect Future Borrowing

When you apply for a second business loan, the new lender will search for existing UCC filings against your business name and EIN. An existing UCC-1 from a prior lender signals that another lender already has a claim on your assets. This doesn't prevent you from getting a second loan, but it can: require the new lender to take a subordinate (second) position, reduce the amount the new lender is willing to lend, or require the existing lender to agree to a 'intercreditor agreement' defining how claims are prioritized.

Business owners who have taken multiple high-rate loans from multiple alternative lenders often have multiple UCC liens stacked against them — which severely limits their ability to access additional capital or refinance into better terms.

When UCC Filings Are Filed Automatically

Most alternative business lenders file a UCC-1 as a standard part of the loan agreement — you may have signed an authorization for it in your loan documents without realizing it. Equipment financing lenders file specific (equipment-only) UCC liens. MCAs and revenue-based funders typically file blanket liens covering all business assets.

You can check whether UCC filings exist against your business by searching the Secretary of State database in your state of incorporation and the state where your business operates. Most Secretary of State websites offer free online UCC search tools.

How to Remove a UCC Lien

A UCC lien is removed when the lender files a UCC-3 termination statement — which they're legally required to do within a reasonable time (typically 20 days) after a loan is fully repaid. If a lender fails to terminate a UCC filing after you've repaid, you can demand termination in writing — and they're obligated to file it.

If you're finding that existing UCC liens are blocking new financing, the most direct solution is to either repay the existing loans and confirm termination, or negotiate with the existing lender to file a UCC-3 amendment that limits their claim to only their current outstanding balance — freeing up your other assets as collateral for new lenders.