When small and growing businesses apply for funding, especially invoice factoring or asset-based lending, one term often comes up: UCC filing. If you’ve ever seen a UCC filing pop up on your business credit report or had a lender mention it during onboarding, you may have wondered: What does this actually mean for my company?
In this blog, we’ll break down what a UCC filing is, why lenders use it, how it impacts your business, and why it’s a standard part of working with funders like Primary Funding Corporation.
What Is a UCC Filing?
A UCC filing (sometimes called a UCC-1 financing statement) is a public notice that a lender has a security interest in one or more assets of a business. “UCC” stands for Uniform Commercial Code, which is a set of laws that standardize commercial transactions across the United States.
When a lender files a UCC, it does not mean your business is in trouble. It simply gives the lender legal protection so they can be paid back from the assets used as collateral, often accounts receivable in the case of invoice factoring.
Think of it as a formal placeholder in the public record that says:
“If this business defaults, we have a legal right to collect on these specific assets first.”
This filing is visible to other lenders and appears in the public UCC database under your business’s legal name.
Why Do Lenders Like Primary Funding File a UCC?
If your business works with Primary Funding Corporation for invoice factoring or a working capital solution, a UCC filing is part of that process. It’s standard across the industry and exists for one purpose: to protect the lender’s legal interest in the receivables being advanced against.
Primary Funding may file a UCC for:
- Invoice Factoring – to secure rights to the invoices, they advance against them
- Asset-Based Lines of Credit (ABL) – to secure collateral such as receivables or inventory
- Customized funding programs – where business assets help support the funding
No matter the structure, the goal is clarity and legal protection on both sides.
What Collateral Does a UCC Filing Cover?
That depends on the agreement, but common types include:
- Accounts Receivable (AR) — most common in factoring
- Inventory
- General business assets — known as a blanket lien
With Primary Funding, the UCC filing usually focuses on receivables, not your entire business.
Does a UCC Filing Affect My Business Credit?
Yes, but not in a negative way.
A UCC filing may show up on your business credit report, but it is not the same as a lien for unpaid taxes or a judgment. It does not mean you’re behind on payments or in financial distress.
It simply shows:
- Your business has taken on secured financing
- A lender has rights to repayment through collateral
- Another lender may need to ask for a payoff or subordination if extending new credit
UCC filings are a normal part of doing business, especially for companies that are growing and need working capital.
What Happens After Your Funding Ends?
Here’s the good news: a UCC filing doesn’t stay forever.
Once:
- Your funding is paid off,
- Your agreement is closed, and
- There are no outstanding obligations…
Primary Funding will file a UCC-3 termination, formally releasing its claim. After that, the record either falls off over time or shows as inactive or terminated.
If you need it cleared quickly because another lender is waiting, just let us know; we’re happy to assist.
What If You Already Have a UCC on File?
This is common.
During onboarding, Primary Funding checks if another lender has already filed a UCC. That is not automatically a deal-breaker. In many cases:
- We can request a subordination
- We can work out a payoff
- Or we can take a specific lien only on receivables
It’s manageable, especially if the existing lender supports your funding needs.
Why This Matters to Small and Growing Businesses
A UCC filing can feel confusing until you know what it really is:
- It’s not a red flag.
- It’s not a penalty.
- It doesn’t hurt your business reputation.
It’s simply a standard tool lenders use to protect both sides of a financing relationship.
If anything, it’s a sign that your business has qualified for funding and is using its assets productively to grow.
Still Have Questions?
We get it, financial terms can feel overwhelming when you’re focused on running your business.
At Primary Funding Corporation, we walk you through every step of the process, including how a UCC filing works and what it means for your business.
Final Takeaway
If you see a UCC filing:
- Don’t panic, it’s a normal part of secured business financing.
- It shows your lender has a right to repayment from specific assets.
- It can help open doors to the capital your business needs.
- And when you’re done? It can be terminated.
A UCC filing protects both sides and ensures your funding is legally secure.
Want to discuss how invoice factoring or flexible working capital could help your business grow with full transparency?
Reach out to Primary Funding today.