Definition
A public notice that a lender has a security interest in a business's assets.
Why it matters
Filed with the Secretary of State where the business is organized.
Where it shows up in a deal
The funder files a UCC-1 financing statement with the Secretary of State of the state where your entity is organized - Delaware for a Delaware LLC, regardless of where you operate. It names the debtor exactly as the formation documents do, describes the collateral, and becomes a public record that any lender searching your name will find.
What it affects
- Perfection and priority run from the filing date, which is why funders file before funding.
- A filing against the wrong name or in the wrong state can be ineffective, leaving the funder unperfected.
- A filing lapses after five years unless a continuation is filed in the final six months.
- Amendments, assignments and terminations are made on a UCC-3, which is what clears an old filing.
The common mistake
Related terms
- LienA legal claim on an asset as security for a debt.
- CollateralAn asset pledged to secure financing.
- Assignment of ClaimsThe federal process that lets a contractor assign government contract payments to a funder.
- Confidential FactoringFactoring in which customers aren't notified and keep paying the business directly.
Questions about how ucc-1 filing affects your facility?
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