How to remove or resolve a UCC filing: Complete guide for business owners

You paid off your business loan months ago. Now you're applying for new financing and get denied. The reason? A UCC filing from that loan is showing up as active, leading lenders to believe your business assets are already pledged as collateral.

Here’s what you need to know about removing UCC filings. 

What is a UCC filing

A UCC filing (also known as a UCC lien or UCC-1) is a notice lenders file with your state when you get financing secured by collateral. It is used to publicly establish their claim on the assets you used as collateral, such as equipment, inventory, vehicles, and accounts receivable. A blanket lien is used to establish an interest in all the available collateral of a business.

The filing helps protect the lender's interests. If you default, a lien can give them first rights to seize and sell that collateral. Other lenders can see the filing exists, which tells them those assets are already spoken for.

These filings often appear in two critical places: state public records (searchable by anyone) and in business credit reports from bureaus like Dun & Bradstreet (D&B), and Experian (Business). Equifax (Business)* does not report UCC liens. 

*Information about Equifax reporting policy was gathered independently by Nav. 

How a UCC filing could hurt your business

A UCC filing isn’t necessarily negative. It simply alerts other creditors that another company has a security interest in property. 

Even when it appears on business credit reports, it’s not likely to affect business credit scores. 

But it can become a problem when it comes to getting new financing. If the lien is still showing as active, the new lender may be concerned about its ability to collect the debt. 

Since assets are already pledged to someone else, the creditor would be behind the first lender in line and might recover nothing.

Blanket liens covering "all assets" are especially problematic. A previous lender who filed a claim on all available assets will have essentially locked up all your collateral. 

The impact can go beyond getting a small business loan. With multiple active UCC filings, vendors may hesitate to extend trade credit. Landlords reviewing your application for commercial space may see multiple liens as warning signs. Even insurance companies factor them into premium calculations.

3 ways to remove or resolve a UCC filing

Many business owners may believe that the only way to resolve a UCC filing is to remove it. This is not necessarily the case. 

You may need instead to get it updated to reflect that the debt has been paid. 

And in many cases, you can’t remove a UCC filing from the public record before it will normally stop being reported. For example, the Arizona Secretary of State advises that you can file a UCC 5 form to “claim if the lien is inaccurate, filed in error, or filed by someone not entitled to do so.” But it also warns, “This form will not remove the filing from our system, and the lien will remain for the remainder of the five-year filing period.”

As you read through the options that follow, keep in mind that removal may not be necessary, or even possible.

Additionally, state laws vary. Not all states allow a debtor to terminate a lien without lender involvement, or clear documentation. 

Method 1: Request lender termination (easiest)

If you have made your final payment on the debt, contact your lender.  Send a written request, asking them to file a UCC-3 termination statement with your state's Secretary of State. Most states require lenders to file within 20 days of your request but that doesn’t always happen. 

Here's what to include in your request:

• Your business name and EIN
• Original loan account number
• UCC filing date and file number (if known)
• Date of final payment
• Request for filing within state-required timeframe
• Request for a copy of the stamped termination form

Follow up after two weeks if you haven't heard back. Some lenders charge $25-$100 for filing terminations, which can be frustrating but may turn out to be worth it. 

After the lender confirms filing, verify it yourself. Wait a week, then check your state's Secretary of State UCC search database to confirm the lien shows as terminated.

Method 2: File termination yourself with the Secretary of State

If your lender won't respond, has gone out of business or the debt was sold, you can file the termination directly with the state's Secretary of State. (In many cases, the lien will be filed in the state in which you operate, but if you formed an LLC or corporation in another state, it may be filed there.) 

Start by visiting the Secretary of State website and locating their UCC filing procedures. Find out how to contact each state’s Secretary of State office here. 

Download form UCC-3 and select "termination" as the filing type (or complete it online if that option is available).

You'll typically need:

• The original UCC-1 file number (find this by searching your state's database)
• Proof the debt was satisfied (final payment receipt, bank statements)
• Evidence you requested termination from the lender
• A sworn statement that the debt has been paid in full

Filing fees typically range from $10-$50. Online filing is fastest (1-3 days), while mail can take 2-4 weeks.

The tricky part may be proving you have authority to file. Most states allow debtors to file these requests when lenders fail to respond to proper termination requests, but you may need documentation showing you attempted to contact the lender. 

Method 3: Dispute on business credit reports

Check which bureaus which may show the filing, such as Dun & Bradstreet (D&B) or Experian (Business). Each maintains separate databases, though they both get this type of information from public record sources. 

If the information on your credit report is not accurate, file disputes with the bureau and provide:

• Copy of the filed UCC-3 termination (get a stamped copy from your state's website)
• Proof of debt satisfaction
• Documentation showing the termination filing date

Credit bureaus typically investigate disputes within thirty days, even though that deadline isn’t required for business credit reports. Follow up if you don't hear back, and request a new credit report to confirm the update appears correctly.

Best practices to prevent future UCC filing issues

Many business owners don’t know UCC filings exist, much less if one has been filed against their business. Again, they are routine in small business financing, and are not inherently negative. 

Still, once you have become aware of them and how they work, you’ll want to stay on top of this information to make sure it accurately represents the financial health of your small business. Here’s how. 

When paying off secured debt:

1. Send your final payment
2. Confirm payment cleared and balance is zero
3. Request written payoff confirmation
4. Request UCC-3 filing (in writing)
5. Set a 30-day reminder to follow up
6. Verify filing in state records after 45 days
7. Check business credit reports 60 days later

Build quarterly UCC filing reviews into your financial routines. Review your business credit reports monthly. Once a year, you may want to search relevant state databases. 

When to get legal help

Many of the steps outlined above should be straightforward and something you can do yourself.  But consider legal counsel when:

• The lender refuses to file a termination despite repeated requests
• You're losing a significant financing opportunity because of an unremoved lien
• The original lender has gone out of business and you can't locate who has authority to file
• You discover a fraudulent UCC filing against your business
• Multiple parties claim interests in the same collateral

Look for attorneys specializing in commercial law or UCC matters. Some may offer free initial consultations and may work on flat fees for straightforward termination matters.

Don’t wait until the last minute

Changes to state records and credit reports can take at least 30-90 days. If you discover UCC filing issues while you're trying to close on financing, you'll likely miss your opportunity. 

Worse, you may get turned down for financing and not realize it was due to an issue that you could have fixed in advance. 

For business owners planning to apply for loans in the next six months, check your UCC filing status today.

Frequently asked questions