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What is a UCC-1 and How Can I Remove It

Understanding the UCC filing process and how to get past UCC filings removed.

What is a UCC-1 Filing

A UCC-1 filing — also known as a UCC lien or UCC financing statement — is a legal document that lenders file with your secretary of state to publicly declare a security interest in your business assets. When you take out a secured loan, the lender may file a UCC-1 to protect the assets you pledged as collateral.

UCC liens aren’t unusual in the world of business financing and, unlike liens on your personal credit, a UCC filing doesn’t indicate that you’ve done anything wrong. Nonetheless, future lenders might be hesitant to approve applications for additional credit until you satisfy your existing lien(s).

An existing UCC-1 filing may increase your company’s credit risk from a lender's perspective — it signals that you already owe money to another lender and that your assets are already pledged as collateral.

This is an important consideration because the lender with the oldest UCC-1 filing legally has the first claim on the assets. In the event of default, the lender who submitted the second UCC filing would only be able to recuperate funds from the sale of any collateral after the first lender has had the opportunity to do so.

How do I remove a UCC filing

Option 1:  Ask the lender to terminate the lien upon payoff.

When you pay off a loan, a good rule of thumb is to immediately submit a request with the lender to file a UCC-3 form with your secretary of state. The UCC-3 will terminate the lien on your company’s asset (or assets) and remove the UCC-1 filing. Keep a copy of the filed UCC-3 for your records. Note that UCC-1 filings automatically lapse after five years if not renewed by the lender, so you may also confirm the lien's expiration date with your secretary of state.

Option 2:  Request a Buyout

If you are moving from another factoring company to BridgeHaul, you can request a buyout. We will enter into an agreement to assign all outstanding receivables to BridgeHaul, and BridgeHaul will pay off the outstanding balance directly to your previous factoring company. 

Option 3:  Visit your secretary of state’s office.

If your lender fails to file a UCC-3 form after you satisfy a debt, another option you may consider is making the request yourself. To do so, you will generally need to visit your secretary of state’s office in person. Once there, you can swear under oath that you have satisfied the debt in full and request that the UCC-1 filing be removed. Note that many states also allow you to submit this request online — check your secretary of state's website for available options.