What is a UCC Filing? What you need to know! [UCC-1 lien]

A UCC filing (Uniform Commercial Code) can be an important tool to utilize when getting a loan. In this video we explain how lender’s file a UCC-1 form, the differences between a ucc blanket lien and a ucc specific lien, and how to remove ucc lien from your business credit report.

What’s up fellow entrepreneur it’s pk patel from midwest corporate credit we’re funding your business is our business what is a ucc filing we get this question a lot from our clients so today we’re gonna cover what the ucc filing is how it impacts the funding of your business and what the risks are associated with the ucc filing so what is a ucc family it stands

For uniform commercial code all it is is a lien that a lender files in order to secure assets that were pledged by the borrower the easiest way to explain what a ucc filing is is to relate it to a mortgage on the real estate side let’s say you go out and buy a house for half a million dollars and you put down 20% you finance $400,000 of it the lender is going to

Then place a lien against the house for $400,000 let’s say you make good on this $400,000 you make every single payment like you’re supposed to according to the promissory note you abide by all the terms 30 years later you make your last payment and you pay it all off the lien which is the mortgage will then be released however if you don’t make every single payment

And you default on that loan the lender has their rights to take your house away and put it in their portfolio and resell it to recoup the investment that they made in making the loan to you in the first place a ucc filing works no different a ucc filing may be used to secure any type of asset that a business owner pledges as collateral this may include equipment

See also  Best Self-Employed Retirement Plans (Solo 401k, Solo Roth 401k, Roth IRA, SEP IRA)

Inventory receivables vehicles real estate or anything else that’s a value there are two types of ucc filings that are most commonly used you have your blanket ucc filing and you have your specific collateral ucc filing a blanket ucc is used to collateralize all assets within the business this type of lien is typically used when a business gets a large amount of

Capital lent to it at favorable terms the other type of ucc filing that’s widely used is a specific collateral ucc filing these are very common when you go financed a vehicle or a piece of equipment all it means is that particular vehicle or that particular equipment that you finance is the only thing that the lender has their rights to repossess if we default

On this particular loan now let’s take a deeper dive into some of the risks that are associated with ucc filings the first risk is the fact that ucc filings may prevent you from getting additional business financing especially those blanket ucc filings once you have those all the other lenders know that all the assets within your business are collateralized yes

Your business may grow and yes you may need additional financing but at that point you may have to refinance and pay off the original ucc filing and seek other ways of funding your business and do some additional financial engineering in order to get the funding you need after the ucc has been filed risk number two is the fact that ucc filings impact your business

See also  Buying Cars on FaceBook MarketPlace. You wont believe this!

Credit every single ucc filing from the last five years will show up on your business cutter report even though some of them may have been released your business curved or it may not catch that right away it’s a good idea to look over your business card court and see what ucc filings show up there and if some of them are paid off and outdated it’s a great idea to

Contact that lender and have those released and risk number three is probably the most obvious of all of them it’s the fact that you can get the essent repossessed and lose it to the lender if you ever default on that loan obligation alright ladies and gentlemen that’s all i got for you this week make sure you subscribe to our youtube channel so you can get next

Week’s awesome video also if you like this video please let me know if you have any questions comment below for midwest corporate credit i’m pk patel thank you for watching

Transcribed from video
What is a UCC Filing? What you need to know! [UCC-1 lien] By Midwest Corporate Credit