Key Takeaways
- Active UCC liens from MCA funders are the #1 reason businesses get denied for bank financing. Clearing UCC liens through payoff, settlement, or legal challenge is often the first step toward accessing affordable financing.
What You Need to Know
Active UCC liens from MCA funders are the #1 reason businesses get denied for bank financing. Clearing UCC liens through payoff, settlement, or legal challenge is often the first step toward accessing affordable financing.
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.
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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.
