Key Takeaways
- UCC liens give MCA funders a powerful enforcement tool. They can block new financing, seize business assets, and create leverage in settlement talks. Understanding your UCC exposure is essential to any MCA debt strategy.
What You Need to Know
UCC liens give MCA funders a powerful enforcement tool. They can block new financing, seize business assets, and create leverage in settlement talks. Understanding your UCC exposure is essential to any MCA debt strategy.
Understanding UCC Liens in MCA
A UCC-1 financing statement is a legal document filed with the Secretary of State that gives the funder a security interest in your business assets. This includes accounts receivable, equipment, inventory, and general intangibles. The lien remains active until a UCC-3 termination statement is filed — which requires either payoff, settlement, or legal action.
UCC liens are public records. Any lender, bank, or potential business buyer can search for them. Active UCC liens from MCA funders are the primary reason businesses get denied for traditional financing.
Need Help With This Issue?
Free consultation — we review your situation and explain your options.
Need Help With Your MCA Situation?
Free consultation with Delancey Street — no obligation.
Frequently Asked Questions
A UCC-1 financing statement is effective for 5 years from the filing date. The funder can file a continuation statement to extend it for another 5 years. If no continuation is filed, the lien lapses automatically.
If the underlying obligation has been satisfied (MCA fully paid or settled), you can file a UCC-3 termination statement yourself. If the funder disputes that the obligation is satisfied, you may need legal assistance to compel termination.
