What Is a UCC Lien?
A UCC (Uniform Commercial Code) lien, formally called a UCC-1 Financing Statement, is a public document that an MCA lender files with your state to announce their legal claim against your business assets and future receivables. These filings are searchable by anyone — including banks, investors, and other lenders.
When an MCA company files a UCC lien against your business, it effectively puts a legal "flag" on your company that can prevent you from getting traditional bank loans, SBA loans, invoice factoring, or other forms of financing. Multiple UCC liens from multiple MCA lenders can make your business completely unfundable by mainstream lenders.
How UCC Liens Hurt Your Business
Blocks Future Financing
Banks and SBA lenders typically won't approve financing when there are active UCC liens, as they can't take a first-priority security interest.
Public Record
UCC filings are public records. Vendors, suppliers, and business partners may see these liens and become concerned about your financial health.
Collection Tool
UCC liens give MCA lenders legal authority to collect against your receivables and business assets in the event of default.
Blanket Liens
Most MCA UCC-1 filings are 'blanket liens' covering all present and future business assets — a very broad claim against your entire business.
How to Remove a UCC Lien
There are several ways to have a UCC lien removed or released from your business:
- 1
Full Payoff
The most straightforward method — pay the MCA in full and request a UCC-3 Termination Statement from the lender. They are legally required to file this within 20 days of your request after full payment.
- 2
Negotiated Settlement
Settle the MCA for less than the full balance. A properly negotiated settlement should always include the lender's agreement to file a UCC-3 Termination Statement as part of the deal.
- 3
Legal Challenge
If the UCC-1 was improperly filed, contains errors, or the underlying MCA agreement is legally questionable, an attorney can challenge the filing directly.
- 4
Lapse After 5 Years
UCC-1 filings automatically expire after 5 years if not renewed. However, this is a long time to wait and lenders almost always file renewals.
UCC Lien Removal FAQ
How do I know if there's a UCC lien on my business?
You can search your state's UCC database (usually through the Secretary of State website) using your business name. Our team can also run a free UCC search for you as part of our consultation.
How long does it take to remove a UCC lien?
Once a settlement or payoff is agreed, the lender should file the UCC-3 termination within 20 days. The removal then reflects in public records shortly after filing.
Can I get new financing while a UCC lien is active?
Some alternative lenders will still work with businesses that have UCC liens, but traditional banks and SBA generally will not. Removing liens opens up significantly better financing options.
What if the MCA company refuses to remove the lien?
If you've paid off or settled the MCA and the company refuses to file a termination statement, you have legal remedies available. An attorney can compel the filing through the courts if necessary.