UCC Filing and What It Means for Your Small Business

8 min read • Mar 02, 2021 • Grant Olsen
Have you heard the UCC fight song? It has great lyrics about always winning in sports and having the best science program in the tri-state region. Just kidding. Even though the acronym UCC sounds like a college of some sort, it stands for the Uniform Commercial Code (UCC). And rather than hand out diplomas, the UCC was developed to regulate how commercial transactions operate.

OK—But What’s a UCC Filing?

At its essence, a UCC filing is a public announcement lenders make that either a borrower has taken out a loan with them or is looking to take out a loan with them. This filing also defines the collateral the borrower puts up to secure that financing, which prevents a borrower from using the same collateral for multiple loans (a move that would put the lenders at much higher risk).

You could think of it as the financial version of “going public” on social media with a new relationship. Once you change that relationship status, other people who might be interested can see you’re already committed to someone else.

Continuing this dating analogy, UCC filings also allow lenders to see how you’ve treated other loans in the past and if you have other entanglements that could complicate the relationship. If both parties decide to take things to the next level, the UCC filing is a legal form filed by the lender that gives notice that they have an interest in your personal or business property.

Where to Find Your Record of UCC Filings

The good news is that many states provide public databases of UCC filings. Be aware that in some cases, a subscription might be required for access.

Click below to learn more about accessing UCC filings in your state:

Check Your UCC Filings ASAP

UCC filings play a major role in your business credit score. And like the various factors that affect your personal credit, UCC filings can occasionally have errors. For example, a lender might forget to resolve the filing after your loan has been completely paid off. Sorting out errors in your UCC filings will always make you more appealing to lenders in the future.

When Does UCC Filing Happen?

This step depends on the lender and the loan product. Some UCC filings happen after you’ve secured funding. Others are actually filed when you apply for funding so lenders can protect themselves from borrowers trying to get multiple loans at the same time without the lenders knowing about it. In the dating world, secret relationships like these are referred to as “hiddenships.” And, spoiler alert, they never end well.

UCC Filings and Unsolicited Calls From Creditors

Because UCC filings are public, some lenders comb through records to find businesses that are looking for funding. They’ll then contact the borrowers and offer financing. Beware of these types of pitches because the loans often come with poor terms or can put you at risk for loan stacking.

When used correctly, your UCC filings can serve as a calling card that helps lenders understand you better and gain trust in a partnership. Just make sure that you proactively manage the process so you don’t get burned by erroneous filings or lured into a bad loan.

Grant Olsen

Grant Olsen

Grant Olsen is a writer specializing in small business loans, leadership skills, and growth strategies. He is a contributing writer for KSL 5 TV, where his articles have generated more than 6 million page views, and has been featured on FitSmallBusiness.com and ModernHealthcare.com. Grant is also the author of the book "Rhino Trouble." He has a B.A. in English from Brigham Young University.