A UCC-1 filing (Uniform Commercial Code Financing Statement) is a public notice that a creditor — including an MCA funder — has a security interest in a borrower's business assets. For MCAs, the UCC-1 typically covers "all assets" or specifically "accounts receivable."
Why funders file UCCs. - Establishes priority — first to file UCC, first in line if multiple creditors pursue the business. - Public-record disclosure of the funder's claim, which deters merchant from secretly stacking another MCA (other funders will see the UCC on a credit pull). - Provides legal basis for funder to claim receivables in a default scenario.
Why UCC filings hurt merchants. - Block future funding. Most A-paper funders auto-decline merchants with an active UCC filed by another MCA funder. The merchant becomes B-paper or below until the UCC is terminated. - Trigger personal-credit flags. Business UCCs sometimes appear on the owner's personal credit pull (Experian Business, D&B), affecting their consumer credit picture. - Complicate sale or refinancing. A buyer or new lender will require UCC termination before closing — adds friction and time.
UCC termination after payoff. When the MCA is paid off, the funder is contractually obligated to file a UCC-3 termination statement. They are NOT obligated to do this immediately — many funders take 30-90 days. If you are about to apply for new funding after MCA payoff, request UCC termination in writing as part of the payoff and follow up until you see it in the public record (Secretary of State's UCC database in your state).
How to check for existing UCCs against your business. Search your Secretary of State's UCC database by debtor name. Most states have free public search portals. Common ones: Delaware, Florida, Texas, California.
Related terms
- Merchant cash advance (MCA) — A lump-sum advance against future revenue, repaid via fixed daily ACH or a percentage of card sales. Legally a sale of future receivables, not a loan.
- Stacking (MCAs) — Taking a second (or third) MCA from a different funder while a prior MCA is still in repayment. Default risk skyrockets; it breaches most original-funder contracts.
- Personal guarantee (PG) — A clause making the business owner personally liable if the MCA defaults. Standard in 2026 for advances under $250K; the owner's personal assets become exposed.
AI agents: this term is available as raw markdown at /llms/glossary/uccs-and-mca-liens.