Riviera Finance May 12, 2022 No Comments

Understanding UCC filings as a business ownerIf you are seeking funding for your small business, you should be familiar with UCC filings.  The UCC or Uniform Commercial Code is the law that governs commercial financial transactions in the United States. The purpose of the UCC is to create a consistent set of laws that apply throughout the nation.

What You Need to Know About UCC Filings as a Business Owner

What is a UCC Filing?

If you’re a new business owner or looking for financing, you need to know about the UCC and its filings- forms that are filed and recorded at the Secretary of State when a business obtains financing. UCC forms are not filed by businesses but by their creditors.  These filings are called ‘financing statements.’

The UCC-1 financing statement, also known as a UCC lien, is the most common type of filing that typically affects small businesses. This is a statement that a creditor will file when providing financing that involves collateral. The UCC-1 gives notice that the creditor has a lien or interest in any collateral business offered to the creditor to secure repayment of the financing. the borrower has put up.

The UCC-3 financing statement is an amendment to a UCC-1. UCC-3 filings can terminate, assign, extend (“continue”), or amend a UCC-1.


The UCC-5 financing statement is an information filing. It can be used as notice on the public record that a previous filing was inaccurate, wrongfully filed, or filed by someone who was not authorized to file.

The Reason for UCC Filings

One of the main purposes of a UCC filing is so that there’s a public record of secured financing that involve collateral. Suppose, for example, that you receive financing from Creditor A. You put up your inventory, equipment, or accounts (i.e., personal property of the business) as collateral. After Creditor A files a UCC-1, any other financier can look up this information and see that your business’s personal property has been put up as collateral. This way, if you try to finance with Creditor B, you can’t put up the same property as collateral, unless Creditor B is willing to take a second position behind Creditor A.
Most UCC-1 liens specify certain assets or possessions that have been used as collateral. However, there are also blanket liens, in which the creditor has rights to “all assets” of the business. UCC filings are valid for five years. They can be terminated sooner or extended (“continued”) based on the mutual financing agreement made between creditor and business obtaining financing.

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 What You Need to Know About UCC Filings

Small business owners should be aware of any active UCC filings recorded against their business, as these can affect their ability to obtain new business financing. Before a creditor approves a business for financing, they will do a lien search, and if your business has an active UCC-1 filed against it, your ability to obtain new financing may be delayed, subject to negotiation between creditors, or even declined. It will depend on the collateral that each creditor has an interest in. Before allowing a creditor to file a UCC-1 financing statement, you should know what assets will be covered and the conditions of termination.

UCC Filings in Factoring

Factoring agreements will require a UCC filing, but assets covered under the UCC filing will differ by factoring company.  Generally, Riviera Finance files a UCC on accounts receivable and property related to the accounts receivable, leaving equipment and other assets unencumbered. This helps our clients obtain other forms of financing such as equipment financing, if necessary.  Invoice factoring is a way to strengthen your business credit as well as cash flow. When you factor your invoices, it doesn’t impact your credit score and you don’t take on additional debt for your business. When you collect immediate cash for your invoices, you can also pay off any existing debts faster.

To learn more about invoice factoring, contact Riviera Finance.


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*This article was originally published in 2019 and has been updated for 2022