UCC-1 Liens: What MCA Funders Filed Against You
When your MCA funded, a blanket lien was filed against every asset your business owns. Most owners never know. Here's what a UCC-1 actually covers and what to do about it.
The Filing You Probably Didn't Notice
Within days of your merchant cash advance funding — sometimes the same day — your funder filed a document called a UCC-1 financing statement with your state’s Secretary of State office. It’s a public record. Anyone can find it. Most business owners have no idea it exists until it starts causing problems: a bank loan gets denied, a new lender won’t underwrite, or a default situation turns into a legal filing they weren’t expecting.
A UCC-1 is not a judgment. It doesn’t mean you owe the money in a court sense. What it does is establish the funder’s legal claim to your business assets as collateral — a perfected security interest under UCC Article 9 that follows your business until it is formally released. If you have multiple MCA advances, you likely have multiple UCC-1 filings sitting in the public record right now, each one stacking a new lender’s claim on top of the last.
Understanding what was filed, what it covers, and how to get it released is essential knowledge for any business owner in MCA debt. It’s also one of the most actionable pieces of a settlement negotiation — because a proper settlement always includes the UCC-3 termination that removes the lien.
What a UCC-1 Lien Actually Covers
The language in most MCA-related UCC-1 filings is sweeping: “all assets,” “all personal property,” or “all accounts, inventory, equipment, instruments, and general intangibles.” This is a blanket lien — not a lien on a specific piece of equipment or a specific invoice, but on everything the business owns or will own during the term of the advance.
In practical terms, that includes: accounts receivable (money customers owe you), inventory on your shelves, equipment, vehicles, computers, cash in your business bank accounts, and in some contracts, intellectual property. The funder is not seizing these assets by filing the UCC-1. But they are establishing that if you default, they have a legal claim senior to most other unsecured creditors.
According to the Consumer Financial Protection Bureau’s small business lending data, small businesses with existing liens on all assets are significantly more constrained in accessing traditional credit — a direct consequence of the blanket lien structure that MCA companies use as standard practice.
How to Find What Was Filed Against Your Business
Every state maintains a public UCC registry through the Secretary of State’s office. Searching your business name takes less than five minutes and costs nothing in most states. What you’ll find: the name of each funder who filed, the date of filing, the collateral description, and whether a termination (UCC-3) has been filed to release the lien.
If you have multiple MCA advances, expect to find multiple filings. Some may be from funders you’ve already paid off — which means a termination statement should have been filed but may not have been. Unpaid-off funders often don’t file terminations promptly even after you’ve satisfied the advance. You are legally entitled to demand a termination filing once the advance is paid in full, and the funder has a legal obligation to file it within 20 days of your demand under most state UCC statutes.
A full lien search is step one of understanding your actual financial position. Most business owners dealing with stacked MCA debt are surprised by how many filings they find — and how much leverage that picture gives them in understanding who holds what claim and in what priority order.
Multiple Liens and the Priority Problem
In UCC law, priority among competing security interests is generally determined by the order of filing: first to file wins. If Funder A filed a UCC-1 on January 15 and Funder B filed on March 3, Funder A has a senior claim on your assets in a default or liquidation scenario. Funder B’s claim is subordinate.
This matters enormously in a stacking situation. If you have five funders with five UCC-1 filings, the funder who filed first has the strongest recovery position. The funder who filed last knows they are at the back of the line. That knowledge affects how each one negotiates — and it’s one of the reasons stacked cases can produce significantly different settlement terms from different funders for the same business.
The FTC’s action against RCG Advances highlighted how some MCA companies used UCC filings aggressively even in situations where the underlying advance was disputed. Knowing your lien priority stack — who filed when, who holds what position — is essential to any intelligent negotiation strategy.
How UCC Liens Block Conventional Financing
Here is the practical consequence most business owners discover too late: an active blanket UCC-1 lien makes it nearly impossible to get a bank loan, an SBA loan, or a conventional line of credit. Banks require a first-lien position on collateral for most secured lending. If an MCA funder already holds a blanket first-lien position on all your assets, the bank can’t get the security position it requires — so it passes.
This is part of how MCA debt becomes self-perpetuating. You can’t access conventional financing to refinance the MCA because the MCA lien is blocking the very credit facility that could replace it. According to the Federal Reserve’s 2024 Employer Firms Report, small businesses that are denied traditional credit are significantly more likely to turn to high-cost alternative financing — which often means another MCA, which adds another lien, which makes conventional financing even less accessible. The cycle is structural.
Getting UCC liens released — through settlement or through formal payoff — is not just a legal formality. It is the step that reopens access to conventional financing and breaks the cycle.
Settlement Always Includes the UCC-3 Release
When you negotiate a settlement with an MCA funder, the UCC-3 termination filing is not optional — it must be part of the written agreement. A UCC-3 is the document that formally releases the UCC-1 lien from the public record. Without it, the lien remains active even after you’ve paid the settlement amount, and your business continues to carry the financing restriction it creates.
Past settlements handled through experienced negotiators have consistently included UCC-3 termination as a standard condition of the agreement. In one completed case, a $7,906 outstanding balance was settled for $5,534 — a 30% reduction — with full UCC release and termination included in the agreement. In another, a $22,050 advance was settled for $11,000 with both a structured payment plan and UCC-3 termination on final payment.
If you are negotiating a settlement on your own and the funder’s offer does not include a UCC-3 termination, it is incomplete. Any resolution — lump sum or structured plan — should specify the UCC-3 filing date and name the party responsible for filing. Results vary and are not guaranteed, but this is a standard term that experienced specialists negotiate as a matter of course.
What to Do If You're Carrying Multiple Liens
Start with the search: pull your state’s UCC registry, find every active filing against your business, and map out the funder names, filing dates, and collateral descriptions. That list is the foundation of understanding your actual position.
Then get a specialist involved before you take any action — before you call funders, before you make partial payments, and especially before you sign any new financing agreement. A new MCA taken on top of multiple active UCC liens is almost always the wrong move, regardless of how the terms are presented.
UCC liens look permanent, but they are not. Settlement removes them. Full payoff removes them. In some cases, a funder’s failure to file a timely termination after payoff can be challenged. The lien that feels like a permanent mark against your business is a document in a public database — and it can be removed. One conversation with an MCA Relief Specialist can tell you exactly what you’re dealing with, what the realistic resolution options look like, and what a clean exit from the lien structure actually costs. This article is general information about commercial business debt and is not legal or financial advice for your specific situation.
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