UCC Filings and Merchant Cash Advances
Not long after you sign a merchant cash advance agreement, you may notice a new entry in a public record with your business name on it. Or a funder you are talking to may ask whether any filings exist against your business. Either way, you have met the UCC. This guide explains what a UCC filing is, why merchant cash advance funders use them, what a filing does and does not mean, and how to check your own record, in plain English.
Forward Funders arranges merchant cash advance options from $25K to $5M for businesses in all 50 states. This article is general education, not legal advice. For questions about a specific filing or agreement, speak with a qualified attorney.
What UCC means
UCC stands for the Uniform Commercial Code, a set of model laws that every state has adopted in some form to govern commercial transactions. One part of it, Article 9, deals with how a party can claim an interest in a business's assets and how that claim is made public. The practical tool is a short form called a UCC-1 financing statement, filed with a state filing office, which is usually the secretary of state's office in the state where the business is organized.
A UCC filing is not a bad sign by itself. Banks, equipment sellers and other lenders use them all the time. It is simply a public notice that someone claims an interest in certain property.
Why merchant cash advance funders file
With a merchant cash advance, the funder buys a portion of your future receivables. Funders commonly file a UCC-1 to put others on notice of that interest. Your agreement usually authorizes the funder to make the filing. That means you may not sign a separate form, and the filing may appear soon after the agreement is signed, before any remittance has been made.
The filing makes the funder's interest part of the public record. Filing details vary by funder and by agreement.
What a filing describes
Every filing includes the name of the business, the name of the funder or its representative and a description of the collateral. The description is the part that matters most, and it varies:
- Some filings are narrow and describe only the receivables the funder purchased.
- Some are broader and describe other business assets as well, which people often call a blanket filing.
Which one applies to you depends on your agreement. Read the collateral description in the filing and compare it with the contract. If the two do not seem to match, ask the funder to explain, and consider asking an attorney to review both.
| Document or event | What it is | What it is not |
|---|---|---|
| UCC-1 financing statement | A public notice filed with a state filing office that a party claims an interest in described collateral | Not a court judgment, not a lawsuit and not an order that freezes an account |
| Security agreement or advance agreement | The contract between you and the funder that explains what the funder may file and what the collateral covers | Not public, and not the same thing as the filing |
| Court papers | Documents from a lawsuit or enforcement process, usually with deadlines | Not something a UCC filing creates by itself |
What a UCC filing does and does not do
People often assume a UCC filing is more serious than it is, so it helps to be precise.
- It is a public notice. Anyone can search the record, including other funders and lenders.
- It is not a judgment. A filing does not mean a court has ruled against you or that you did anything wrong.
- It does not by itself freeze a bank account. If funds in an account are unavailable for any reason, ask the bank or processor for the document and the stated reason rather than assuming a filing caused it.
- It does affect other financing. A new funder reviewing your file may see the existing claim, which is one reason complete disclosure matters when you apply.
Filings generally stay effective for a set period of time unless the secured party continues them. Rules vary by state, and the secured party can also amend or terminate a filing.
How a filing can affect your next application
Funders commonly search public filings as part of reviewing a file. They do it to see which advances and loans exist, and which of them have claimed what. What they find, together with the recurring debits on your statements, gives them a picture of your obligations. Our guide to what funders look for in business bank statements explains the statement side of the same review.
A few practical consequences follow:
- If an old filing still shows after your advance has been fully delivered, a new funder may wonder whether the earlier obligation is truly finished.
- A broad filing may make some funders hesitant to offer more, since the collateral is already described.
- A current, accurate list of your obligations on your application helps everything line up.
What to do once an advance is complete
When an advance has been fully delivered, you can ask the funder to terminate its filing and confirm it in writing. Many agreements describe what happens at the end of the term. Do not assume it happens automatically. Search the record yourself a few weeks later and keep copies of whatever the funder sends you. If a filing still shows after you expected it to be removed, follow up in writing, and ask an attorney if the funder does not respond.
How to check your own record
- Find the right filing office. It is usually your state's secretary of state, and many offer an online search for UCC filings.
- Search by the exact legal name of your business. Use the name on your formation documents, not a trade name. Filings made under a slightly different name can be harder to find.
- Read each result. Note who filed, when, and what collateral is described.
- Match filings to agreements. Make sure each one lines up with an advance or loan you know about.
- Ask about anything unfamiliar. If you do not recognize a filing, ask your accountant or attorney before applying anywhere else.
Questions to ask a funder before you sign
- Will you file a UCC-1, and what collateral will it describe?
- When the advance is complete, how and when will the filing be terminated?
- If I renew or refinance, what happens to the existing filing? See MCA renewals explained.
It also helps to know how repayment works, since that is where most day-to-day questions come up. See how merchant cash advance repayment works for the common methods.
Getting started
Applying itself is simple. You need a completed Funding Application, your last four months of business bank statements, and month-to-date activity if it is after the 10th of the month. Our application preparation checklist lists each item. We work with businesses in every state; see States We Serve for coverage, or see how the process works for a business like yours on pages such as trucking and restaurants.
Funders decide whether to make an offer and set their own requirements, including what they file. When you are ready, start on our apply page.
Frequently asked questions
What is a UCC filing?
A UCC filing, or UCC-1 financing statement, is a public notice filed with a state filing office saying that a party claims an interest in described collateral. It is a notice, not a court judgment.
Why would a merchant cash advance funder file one?
Funders commonly file to put others on notice of their interest in your receivables. Your agreement usually authorizes the filing.
Does a UCC filing freeze my bank account?
Not by itself. A filing is a public notice. If funds in an account are unavailable, ask the bank or processor for the document and the reason, and consider speaking with an attorney.
Will a UCC filing stop me from getting other funding?
It does not automatically stop it, but a new funder may see the filing and consider it when reviewing your file. Each funder sets its own requirements.
How do I find out whether a filing exists against my business?
Search your state's UCC filing records, usually through the secretary of state, using the exact legal name of your business. Read each result and match it to an agreement you know about.
Should the filing be removed when my advance is complete?
It is reasonable to ask the funder to terminate it and confirm in writing. Do not assume it happens automatically, and check the record yourself afterward.
Ready to start? Call (718) 619-9867, Monday through Saturday, 8am to 8pm, or begin online.
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Funders make the decisions and provide the written agreements. Availability, amounts and timing depend on the funder and your business information, and submitting an application does not ensure an offer.