Quick answer
Yes — virtually all MCAs are secured by your business receivables via a UCC-1 lien filed at funding. The lien gives the funder a priority claim on your future deposits and accounts receivable until the advance is fully paid. The lien blocks or complicates other financing while in place. At full payoff, request a UCC-3 termination from the funder — funders sometimes 'forget' to file it, leaving the lien on record indefinitely.
Full answer
What 'secured by receivables' means structurally. Even though an MCA is contractually a purchase of receivables (not a loan), the funder protects its position by filing a UCC-1 financing statement at the state Secretary of State. This UCC filing creates a public-record claim against your business receivables and, in many contracts, against ALL business assets (the 'all assets' lien). The lien stays in place until the advance is fully repaid and the funder files a UCC-3 termination.
Why funders file UCC liens on MCAs. Two reasons. (1) Priority claim against future receivables in case another creditor (lender, judgment creditor, IRS) tries to attach the same receivables. (2) Notice to other potential funders that this merchant has an existing receivables-backed obligation — discourages stacking. The UCC filing is standard industry practice and not by itself a red flag.
What the lien covers. Read the UCC-1 filing carefully. Typical scope: (a) 'all accounts, accounts receivable, payment intangibles, deposit accounts, instruments, chattel paper, and proceeds thereof.' Some aggressive funders file 'all assets' liens covering: (b) the above PLUS inventory, equipment, fixtures, general intangibles, and other personal property. The 'all assets' lien is broader and can block other financing more aggressively. If you see 'all assets' on the UCC-1 and your contract only mentions receivables, push back — the lien should match the contract scope.
How to find existing UCC filings on your business. Search your state's Secretary of State UCC database (most states are free or charge $5-15 per search). Search by debtor name (your business legal name). The results show all active UCC-1 filings with filing dates, secured party (funder name), and collateral description. Pull this BEFORE applying for new financing — any new funder will pull it during underwriting.
Impact on other financing while the lien is active. (1) Bank LOCs and term loans: most banks won't fund into a business with an active MCA UCC lien (they require first-position lien on receivables). (2) SBA loans: SBA generally requires lien subordination or removal before funding. (3) Equipment financing: equipment lenders are usually OK if the lien is receivables-only (not 'all assets'). (4) Invoice factoring: factors require first-position lien on receivables — incompatible with active MCA. (5) Another MCA (stacking): some funders will accept second-position UCC, others won't. Stacking violates most first-position MCA contracts regardless.
Subordination as a workaround. If you need other financing while an MCA is active, you can request the MCA funder to subordinate their lien to a new lender. Subordination means the MCA funder agrees to take second priority behind the new lender on receivables. Funders sometimes agree, especially if the new lender's facility helps the merchant stay current on MCA payments. Cost: typically a $250-$1,500 subordination fee. Not all funders will subordinate, and most won't subordinate to a competing MCA.
Why lien termination at payoff matters. Once you've fully paid off an MCA, the funder is supposed to file a UCC-3 termination statement at the Secretary of State, releasing the lien. In practice, many funders delay or skip this filing — sometimes because their servicing teams are understaffed, sometimes intentionally (an active lien continues to discourage you from going to competitors). An un-terminated lien blocks future financing applications and can cause issues with M&A transactions, refinancing, or selling the business.
How to get the lien terminated. Process: (1) Get a written payoff statement and pay the exact amount. (2) Get a written payoff confirmation from the funder confirming the balance is zero. (3) Email the funder's servicing team specifically requesting: 'Please file UCC-3 termination on the UCC-1 financing statement filed on [date] at [state], filing number [###].' (4) Follow up in 14 days; if not filed, escalate to the funder's compliance team. (5) If 30+ days pass without filing, you can file the UCC-3 yourself in many states (you're an 'authorized party' once the underlying obligation is satisfied) — but get legal advice first.
Statutory remedies if the funder won't terminate. UCC Article 9 (UCC-9-513) requires the secured party to file a termination statement within 20 days of written demand once the obligation is satisfied. Failure to comply makes the funder liable for the merchant's actual damages PLUS $500 per UCC-9-625(e). If a funder ignores your termination request for 30+ days post-demand, consult a UCC attorney — the statutory damages and forced termination usually unstick the situation quickly.
Lien priority and stacking implications. If you take a second MCA while the first lien is active, the second funder typically files their own UCC-1, but the first lien retains priority. In a default / liquidation scenario, the first lien holder collects from receivables first; the second collects only what's left. This is why first-position funders strongly discourage stacking — and why second-position funders charge higher factor (greater risk).
What to ask before signing. (1) 'Will you file a UCC-1 financing statement, and what's the collateral scope?' (2) 'Will the UCC be receivables-only or all-assets?' (3) 'What's your standard timeline to file UCC-3 termination after payoff?' (4) 'Will you subordinate to a future SBA loan or bank facility if I qualify?' (5) 'Can I see a copy of the UCC-1 you intend to file?' Getting these in writing before signing avoids surprises.
Bottom line: UCC liens are standard on MCAs and not by themselves a problem — but the lien scope, lien duration, and termination process all matter materially for your future financing access. Track the lien filing at funding, push for UCC-3 termination at payoff, and use the UCC database to verify the lien is cleared before applying for next-tier financing.
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Methodology. Fundnode is an independent funding-platform that scores merchants against our 100-funder database. We earn referral fees from funders when merchants apply via Fundnode. Editorial rankings and answers are independent of fee structure. Updated 2026-06-25.