A UCC filing — formally a UCC-1 financing statement — is a public document filed with your state's secretary of state that puts other creditors on notice that a specific lender or funder has a claim on certain business assets. It comes from Article 9 of the Uniform Commercial Code, which is why every state has a near-identical version.
For merchant cash advances, the UCC filing is standard. Most direct funders — Westline included — file a UCC-1 on the future receivables tied to the advance. It's not a mortgage, it's not a personal lien, and it doesn't show up on your personal credit report. But it does show up when you (or a competitor) search the secretary of state's business records, which is why owners run into it months later.
What a UCC-1 Actually Says
The form itself is short — usually one page. It contains:
- Debtor: Your business legal name and address
- Secured party: The funder or lender's name
- Collateral description: What's covered — for an MCA, this is typically "all future receivables and proceeds" or "all accounts and contract rights"
- Filing date: When it became effective (lasts 5 years, can be renewed)
It does not contain the dollar amount of the advance, the factor rate, or the term. Public records show the lien exists; the underlying contract stays private.
Why Funders File One
The UCC filing serves two practical purposes:
- Priority. If you take a second advance from another funder, the UCC filing date determines who gets paid first if things go sideways. First to file, first in line.
- Stacking detection. Before a funder approves an advance, they search the UCC database. If they see another active MCA-style filing, that's a flag. Some funders won't fund over an existing filing; others will but at worse terms.
What a UCC Filing Does NOT Do
- It doesn't seize anything. A UCC filing is a notice, not a foreclosure. It just establishes the funder's claim if you default.
- It doesn't appear on personal credit. UCC filings are business records. Equifax/TransUnion/Experian consumer reports don't show them.
- It doesn't block your operations. You can still run the business, pay bills, hire, fire, accept new clients. The lien only matters at default or refinance.
- It doesn't survive payoff automatically. Once the advance is paid in full, the funder is supposed to file a UCC-3 termination. Some forget. You may need to ask.
How to Check Your Own UCC Filings
Every state's secretary of state runs a free public search. Common URLs:
- New York: dos.ny.gov/business-entity-search
- California: bizfileonline.sos.ca.gov
- Texas: direct.sos.state.tx.us/UCC
- Florida: search.sunbiz.org/Inquiry/CorporationSearch
Search by your business legal name. Active filings show with debtor, secured party, and filing date. If you see an old filing from a paid-off advance still active, that's a reminder to request a termination.
How to Remove a UCC Filing After Payoff
Two-step process:
- Get a payoff letter. Once your final ACH clears, request written confirmation from the funder that the advance is paid in full and zero balance.
- Confirm UCC-3 termination filed. Funders are required to file a UCC-3 termination statement within 20 days of payoff in most states. If they don't, you can file it yourself with the payoff letter as supporting documentation. Most secretaries of state charge $20-50 to file.
If a funder refuses to terminate after payoff, that's a legal violation in most states and grounds for a complaint to the state attorney general or the funder's regulator.
Stacking and the UCC Search
If you're considering a second advance while a first is still active, the second funder will see the existing filing. Some still fund — at higher cost, smaller amounts, or with reconciliation requirements. Most direct funders (Westline included) decline new business with active stacked positions because the math rarely works out for the merchant.
UCC and Westline
When we fund an advance, we file a UCC-1 on future receivables. When the advance is paid off, we file the UCC-3 termination within 5 business days. If a merchant ever has trouble finding the termination, our ops team will resend the filing receipt within 24 hours of the request.
Sources & References
- Bank denial and small business credit access figures cited in this piece are derived from the Federal Reserve Small Business Credit Survey. Approval rates for small business credit applications at large banks have ranged from approximately 13%-31% across recent survey years, depending on bank category and reporting period.
- Small business finance landscape and lending program data: SBA Office of Advocacy.
- Merchant cash advance industry standards and disclosure practices: Small Business Finance Association (SBFA).
- Commercial financing disclosure regulations referenced (NY FAIR Act, CA SB 1235/666/362, VA, UT) are summarized from the published statutes; consult counsel for specific compliance application.