Whether it’s putting up some of your assets as collateral to take out a business loan or entering into a financial agreement with a third-party organization, running a business is filled with major financial decisions and risks.

In this situation, lenders also need to be confident in the borrowers’ ability to repay the loan before signing off on the loan approval. This is where UCC filings come in—they are a standard part of the loan application process for small businesses. Keep reading to learn more about UCC filings and searches and why they are necessary.

What Is the Uniform Commercial Code (UCC)?

Adopted by almost all the states in the U.S., the Uniform Commercial Code or the UCC is a standardized set of rules and regulations that govern interstate business transactions. It was primarily established to eliminate any potential confusion caused by the varying legal and contractual principles in the different states.

The nine articles in the UCC provide guidance for different types of business transactions and allows businesses to place a lien against another enterprise or individual.

How Do UCC Filings Work?

A UCC filing or a UCC-1 Financial Statement is a legal document that allows debtors to claim a lien on your property, which then effectively serves as your collateral. A UCC filing can be used in several scenarios. These include:

  • Taking out loans for small businesses.
  • Leasing business equipment or vehicles.
  • Investments from a venture capital firm.
  • Bulk or warehouse sales and auctions.
  • Contractual agreements between parties.
  • Letters of credit.
  • Depositing funds into a collection account.

In each of these instances, once a creditor issues a UCC lien on your property, they have legal authorization to seize the property if you default on your loans or claim for bankruptcy. Moreover, the collateral for the UCC can vary based on the situation. For example, if you’re leasing a piece of equipment, the collateral for that UCC filing will most likely be the equipment itself.

Though UCC filings don’t really affect your business’s day-to-day operations, they can still impact your funding and asset selling abilities. So if you’ve provided collateral for a loan, it is always safe to conduct a UCC search and check if your creditor has filed a UCC against your company.

What Is a UCC Search?

UCC searches are conducted to figure out if your business assets are already owed as collateral for a previous debt. This prevents the same assets from being used as collateral for multiple debts.  You can access all your UCC information by contacting the secretary of state for the state in which your business is registered or through an online database.

What to Look for When Conducting UCC Searches

The UCC search process can often be quite complicated. Always search using the debtor’s correct legal name to avoid confusion. Also, make sure to search under any former names the debtor might have used since there might still be active filings under that name, even if it’s no longer in use.

To be more thorough, it’s also advisable to conduct searches for additional types of liens other than UCC, including federal tax liens, judgment liens, state tax liens, and litigation searches.


Even the simplest of UCC searches and filing requires due diligence and attention to the smallest of details, which is exactly what we offer at Real Title Services. Call us today at 213-212-2161 or contact us via our website to get started.