Qualifying for business financing is often a tricky process. To increase your chances of approval, a lender needs to believe that loaning money to your company is a smart financial decision. In other words, your business needs to have an acceptable level of risk in the eyes of a lender.
How can you achieve this level of creditworthiness for your business? Having solid business credit scores and a credible, established business with healthy profits is a great start. You can also check out this guide from Nav for more great tips.
Still, even if you think your business has all its financial and credit ducks in a row, you need to be aware of another potential obstacle which might hurt your chances for loan approval – the UCC filing.
What Is a UCC Filing?
A UCC filing, also known as a UCC lien or a UCC-1, is a financing statement which lenders can file against your business with your secretary of state. When you take out a secured loan, the lender may file a lien to protect the asset(s) you committed to secure financing. This might be a piece of equipment, a vehicle, property, or even a blanket lien naming all your assets.
A UCC-1 protects a lender’s interests for five years (unless the lender refiles) and will typically be included on your business credit reports. (Remember, you can check your business credit reports and scores with Nav.)
Keep in mind that UCC filings are public records. Therefore, even if a UCC lien doesn’t show up on your business credit reports for some reason, it might still come up if you apply for new business financing.
Why a UCC Filing Could Hurt You
UCC liens aren’t unusual in the world of business financing and, unlike liens on your personal credit, a UCC filing doesn’t indicate that you’ve done anything wrong. Nonetheless, future lenders might be hesitant to approve applications for additional credit until you satisfy your existing lien(s).
Why? Because an existing UCC-1 filing may increase your company’s credit risk from a lending perspective. It signifies that you already owe money to another lender and that your assets are already committed to someone else.
This is an important consideration because the lender with the oldest UCC-1 filing legally has the first claim on the assets. In the event of default, the lender who submitted the second UCC filing would only be able to recuperate funds from the sale of any collateral after the first lender has had the opportunity to do so.
You can learn more about UCC filings here.
Ways to Remove a UCC Filing
In a perfect world, a lender should remove a UCC-1 whenever you pay off the debt associated with it. Unfortunately, it doesn’t always work that way. You might satisfy a debt in full yet discover that the UCC-1 filing remains in place.
You can check your business credit reports and your secretary of state’s website to search for UCC filings against your company. If you discover an outstanding UCC lien which is still in place after you satisfy a debt, here are some steps you can take to remove the UCC filing:
1. Ask the lender to terminate the lien upon payoff
When you pay off a loan, a good rule of thumb is to immediately submit a request with the lender to file a UCC-3 form with your secretary of state. The UCC-3 will terminate the lien on your company’s asset (or assets) and remove the UCC-1 filing.
Note: this may or may not trigger the removal of the UCC filing from your business credit reports. Dun & Bradstreet, for example, will not remove a closed UCC filing until receiving a request from a customer or until the lien has been inactive for 11 years — whichever occurs first. You should always verify.
2. Visit your secretary of state’s office
If your lender fails to file a UCC-3 form after you satisfy a debt, another option you may consider is making the request yourself. To do so you will generally need to make a trip in person down to your secretary of state’s office. Once there, you will be able to swear under oath that you’ve satisfied the debt in full and wish to request for the UCC-1 filing to be removed.
3. Dispute inaccurate information on your business credit reports
It’s a smart idea to keep tabs on your three major business credit reports and scores from Dun & Bradstreet, Experian, and Equifax. If you discover an outdated UCC filing on your credit reports which has already been released, you can dispute the mistake and ask the business credit reporting agencies to remove it from your reports. Keep in mind, however, there is no federal law requiring they do so.
Don’t Wait Until the Last Minute
Changes to your business credit reports and your state’s public records take time. If you plan to apply for new business financing soon, it’s wise to make sure you’re well-prepared for the loan application in advance.
Whatever you do, don’t wait until the last minute to try to correct an outdated UCC filing. It’s a mistake which might cost you a loan approval.
This article was originally written on January 2, 2019 and updated on January 10, 2024.
Hi i have ucc i want to lifted temporarily
To apply to rts factoring company thanks
Unfortunately we can’t do that for you. Hopefully you can pursue the resources in the article to get it taken care of.
I live in Kern County I own my home there is a UCC filing with my address as a debtor I can’t find nobody in Kurton County that understands what a UCC except one law firm Clifford and Brown Who deals with corporate reviewed my file and stated this is definitely fraud but we don’t do residential I have to go into court and have this removed by a judge I don’t know what documents to file into the court
Unfortunately Melissa we don’t have detailed information for each court’s procedures. Usually the court will publish information or answer questions to help you understand what to file.
When I did a background check on myself I found a UCC-1 filing that had been renewed again and again since 2009. The current one does not expire until 2026. I have absolutely no idea what this is for. I have never had a business and have not lived in the state where this was filed since 2005. How do I find out what this is and who filed it? I have been working like crazy to get my credit squared away so I can start an apiary but this threw me for a loop. The filing is under my maiden name Penelope Anne Kaisershot.
Perhaps it’s fraudulent? As the article states, you’ll probably need to start with your Secretary of State’s office to get more information about the UCC filing and to find out how to dispute it. You may need to get an attorney involved if you can’t resolve it yourself. I’m sorry I can’t be more specific – procedures vary by state.
I didn’t know it was filed against my company, but one is from a car that is financed in my name and not the company’s.
Can I find out who filed the UCC-1 on our company?
If you’re not sure, you may need to contact the court in your area to research it.
How do I get my information and phone number off the list of people that keep calling me.
I’m sorry I am not sure I understand your question.
I keep getting phone calls for a business I have no connection to. How do I get my number removed from their list
Have you tried calling the number to talk with them? That might be a good first step…?
You can’t–unfortunately. UCC filings are public record and companies will call you incessantly offering business refinancing, working capital (at very high rates) and teh like. The best way to avoid this is to screen your calls with an app like Robokiller; I use it and it has cut back on the spam calls by 98%. Its 3 bucks a month or 35 bucks for the year which is like a small price to pay to keep your sanity… hope this helps
I don’t own a business but I have a ucc. Is it going to hurt my chance of getting credit??
UCC filings don’t generally show up on personal credit. But I would recommend you investigate to get to the bottom of this.
Can I get a UCC removed if I have never exchanged any business with the company?
You may need to contact the court where it is filed to see if they can help you through the process. If not you may need to get an attorney involved.
I have an imminent refinancing. I have a UCC. Can the lender (a bank) eradicate it upon payment of the payment of dent. Also it pertains to business line of credit, not a loan. The bank also wants the line of credit closed. The is, I believe is incorrect.
Please, please advise promptly. The closing is November 6.
I don’t understand your question I’m sorry.
Tafs company Factoring scam to me they send application under agreement I didn’t reading that time
Next day reading agreement under application so I told them cancel application they refuse.
They filed UCC on my business Not permission agreement with them. They refuse to release the lien and this was scam to me
filled bk chapter 7 two years ago and just found out of a possible ucc fixture lien on the house . the party putting on the lien never showed up in court.
I received a letter from my lender stating that I have to pay $103.50 for “UCC Termination Charge – WA”
I have paid the loan off in full and the lender closed my account with a $0.00 balance and even reported it to the credit bureau’s as paid off, closed, and zero balance.
I bought replacement windows for my house and took a 18 mo. interest free loan. I paid off the loan before the 18 months so no interest was charged.
Is this a normal thing to have to pay to have the UCC against my home removed from the lender or are they just trying to get me to pay for them filing a loan protection against me?
A Factoring company filed a UCC on my business without me signing an agreement with them. They refuse to release the lien and was told that the application I signed requesting a “quote” via their website grants them permission to file a UCC-1. Can an application have that much power?
Ana,
Probably, though the specifics are really a question for an attorney. Have you paid off your advance with them?
As stated in my post. They never advanced me any money. They took money out of my account twice.
My husband passed in April 2015 however prior to his death he borrowed money from a loan company to have our driveway repaired and to have a pool build. He passed before the work got started. The finance company have put a lien on the pool on the property, however there is no pool. The loan was in my husband’s name ONLY and the house was in my husband’s name only however the home belongs to me and my 11 year old son, now. I am trying to refinance however I can’t because of the lien. I also found out the loan company drafted 3 payments out of my deceased husband account 1 week after his death. I have the bank statements. What can I do, because I can’t afford a lawyer? My husband served in the military, 27 years.
Yvonne – I really wish I could help but it sounds like you’ll need some legal advice here. Have you tried contacting Legal Aid in your area? Also don’t rule out getting a free consultation with a consumer law attorney. If the lender acted improperly the attorney may be able to help you on a contingent fee basis, which means you pay them if you win. (They may also be able to refer you to pro bono legal help if you qualify.) Legal Aid directory is here and the National Association of Consumer Advocates is here. I hope you find the help you need.
We are looking to have ucc listing rememoved as well as a person listed who doesnt own the company. How do we accomplish this?
Brian – have you tried the approaches in the article? If so, what hasn’t worked for you?