What is a u.c.c. (uniform commercial code) filing and why would any business file one?
If a business is applying for a loan the bank (and possibly the State) will require a UCC filing to preserve their security interest in the collateral offered for the loan. Conversely, when a business applies for a loan, the bank will review any other UCC filings to see if any of the business’ property has been pledged to another lender as collateral. While real estate and motor vehicles are deeded or titled and can be branded to reflect a security interest, no such process exists for other business property. Anything from leasehold improvements, manufacturing equipment, store fixtures, certain inventory, office equipment, etc. can be pledged as security for a loan but must be documented on a UCC filing. UCC filings are a matter of public record, making it difficult for a business to fraudulently pledge collateral for a loan that has already been pledged to another lender.
