UCC-1 Filing
A UCC-1 financing statement is the legal filing creditors make under the Uniform Commercial Code to publicly establish a secured interest in a debtor's personal property collateral — used by MCA funders to secure their position against future receivables and to provide notice of secured creditor status.
Why This Matters
UCC-1 filings serve dual purposes in MCA. Operationally, funders file UCC-1s on funded merchants to publicly assert their security interest in the merchant's future receivables — establishing priority against subsequent creditors. Strategically, UCC-1 filings are public records that prospecting teams mine to identify funded merchants for renewal, second-position, or competitive solicitation. The volume of UCC filings against a single merchant is also a key risk signal — multiple recent filings indicate stacking risk affecting both underwriting and prospecting prioritization.
Example
Funder originates $50K MCA on Tuesday; files UCC-1 in merchant's home state Wednesday. Filing fee $25-$75. Filing publicly records: 'Funder X holds secured interest in all receivables, accounts, contract rights of Merchant Y.' Provides notice to subsequent creditors and establishes priority date for future enforcement actions.
Frequently Asked Questions
Frequently Asked Questions
How long does a UCC-1 filing remain effective?
Five years from filing date under standard UCC Article 9 provisions. Funders file UCC-3 continuation statements before expiration to extend protection. Once underlying obligation is fully repaid, funders should file UCC-3 termination releases — though many fail to do so promptly, leaving outdated filings on public record.
Can merchants challenge UCC-1 filings?
Yes via UCC-3 information statements claiming the filing is unauthorized or after the underlying obligation is paid. Wrongful UCC filings expose filers to potential damages claims. However, valid UCC-1s securing legitimate funding agreements are routine and unchallengeable absent material defect.