Clearing filings that block a loan or a sale
Why an old UCC filing matters
Funders file UCC-1 financing statements against the businesses they fund. No one checks those filings when they are made. A filing that stays on the record after the advance is paid, or that covers more than the agreement allowed, can block a bank loan, an SBA application or the sale of the business.
Tools the law provides
- Termination on demand. Once there is no remaining obligation and no commitment to give value, UCC § 9-513(c) generally requires the secured party to file a termination statement within 20 days after an authenticated demand.
- Damages for ignoring it. UCC § 9-625 allows damages, including a statutory amount, when a secured party fails to comply.
- Unauthorized filings. A filing is effective only to the extent the debtor authorized it (UCC § 9-509). Blanket "all assets" filings, or filings against affiliated companies that never signed, can be challenged.
- An accounting. UCC § 9-210 gives the debtor a way to ask the secured party to state what it claims is still owed.
Working to a closing date
If a loan, refinance or sale is pending, tell us the closing date. Demands and terminations can be sequenced so the record is clean in time.
Frequently asked questions
The advance is paid off. Why is the UCC filing still there?
Filings stay on the record until a termination statement is filed. If the funder will not file one, the UCC gives you a way to demand it.
Can a UCC filing stop me from getting a loan?
Often, yes. Lenders see existing filings on a lien search and may refuse to close until they are terminated.