Understanding UCC Filings and How to Find Them

Many people have heard of a UCC filing or Uniform Commercial Code filing, but not many are familiar with precisely what these filings are, where to find them, and when you need to find them. Today, we’ll answer all those questions and more as we explore everything you need to know about UCC filings.

Every business owner navigates a complex world of legal regulations, financial transactions, and bureaucracy. Among the plethora of documents, regulations, and filings is the UCC filing—a crucial element that often flies under the radar but can have a major impact on a business’s operations. 

So what is a UCC filing, and why should business owners care? 

What is a UCC Filing?

Uniform Commercial Code (UCC) filings are legal forms a creditor files to provide notice it has an interest in the personal property of a debtor (an individual or business entity). This form of lien is public record, signaling the creditor has the right to repossess secured assets if the debtor defaults on the associated obligation.

Why Are UCC Filings Important for Business Owners?

The answer generally comes down to three primary reasons: protecting your assets, establishing priority in secured transactions, and complying with legal requirements. 

  1. Protection of Assets

UCC filings provide a legal framework to secure assets tied to a business loan. This comforts lenders and offers a structured process for business owners to use assets as collateral.

  1. Establishing Priority in Secured Transactions

If your business defaults, UCC filings help determine the priority of claims. They establish who has the first right to your assets, which is particularly important when multiple claims are present.

Performing UCC searches is just one part of due diligence. Read this article to learn about customer due diligence in financial services next.

  1. Compliance with Legal Requirements

Staying compliant with state and federal laws is non-negotiable, and UCC filings are often a legal requirement when securing loans with business property.

How to Find UCC Filings

As for how to find UCC filings, the process is relatively straightforward but can depend on the state you live in. Most UCC filings are public records; a business owner can access them through state databases or search services specializing in retrieving public records. These filings are also commonly found in credit reports ordered by lenders when evaluating a potential borrower.

Here are a few of the different routes you can take.  

Online Resources

Many states have online databases that help you search for UCC filings. A centralized starting point could be the Secretary of State’s website or a state’s Department of Financial Institutions.

Here’s a handy website where you can search UCC databases by state.

State- or County-Specific Databases

Each state has its own system for managing UCC records. Depending on where your business is registered, you’ll want to look up the proper database and search parameters necessary for your UCC search.

Third-Party Services

Several companies offer UCC searching and filing services. They can navigate the nuances of state-specific variations and compile the necessary information for you. CS Business Screen can take the entire filing process off your shoulders and ensure compliance with state laws. Let us help you with the whole process, from checking name availability to filing documents on your behalf.

Understanding UCC Filing Details

A UCC filing will often contain:

  • Debtor’s name and address
  • Creditor’s name and address
  • Description of the collateral
  • Indication of the obligation covered by the filing

Interpreting this information accurately is vital to understanding the scope and validity of the lien filed. Again, CS Business Screen can assist in this process and provide additional resources to ensure you are fully informed. 

Here’s another article you don’t want to miss next: Critical Investment Due Diligence: Private Equity & Venture Capital

UCC Filings: FAQs

Here are three common questions our clients have for us about UCC filing.

What’s the difference between a lien and a UCC filing?

The primary distinction between a lien and a UCC filing lies in the mechanism by which they establish security interests in a borrower’s business assets. Unlike a traditional lien, which directly places a claim on assets, a UCC filing serves as the catalyst for creating a lien against collateral. The nature and extent of this lien can vary, ranging from specific assets targeted by a UCC lien to broader coverage under a blanket UCC filing, encompassing groups of assets.

How long do UCC filings last?

UCC filings typically remain in effect for five years. After this period passes, they are no longer valid and automatically lapse. Because of this, lenders often let this time pass without terminating the UCC filing themselves by proving they have no remaining obligation to the debtor.

Why should I check UCC filings?

There are several reasons businesses are encouraged to check UCC filings.

  • Identifying existing liens: Checking UCC filings can help you determine if a potential borrower has any current liens against their assets. This information can impact your decision to lend money.
  • Assessing the risk of non-payment: A UCC filing signals that another creditor has already claimed an interest in certain business assets. This can mean you are exposed to a higher risk of non-payment if the borrower defaults.
  • Avoiding priority disputes: In cases where multiple creditors have competing claims on the same collateral, UCC filings establish the order in which these claims were made. By checking UCC filings, a business can avoid getting involved in disputes that may significantly delay recovery efforts.

Summary: Check UCC Filings with Our Help

UCC filings are a valuable tool for risk management, financial planning, and legal compliance for business owners. Knowing what UCC filings are, why they are important, and how to locate and comprehend them prepares you to make informed decisions and maintain your business’s legal and financial integrity. 

Arm yourself with this knowledge and stay proactive in your UCC filing management—contact CS Business Screen today to find out how we can help you uncover this and other essential business information. 

Did you learn a lot about UCC filings in this post?

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