Creditors commonly grant loans by placing UCC liens on a business’s assets, which could serve as collateral. Debtors can benefit from these arrangements, considering they are quick and easy to process, which might be ideal for urgent funding. Like other loans, however, these UCC filings can come with risks and appear on the business’s credit reports until fully paid.
Sometimes, these liens could stay on the report even after paying back the loan. There may be reasons to suspect fraud or theft, but that is not always the case.
Why it remains in the report
One of the most common reasons it happens is that you never requested to remove it. Usually, UCC liens can show how well the business is doing.
If a business has multiple filings, it could be a sign that it cannot take on more debt, which could put the debtor and potential creditors at risk. Because of these factors, the debt could stay on the report for five years unless the lender removes it after receiving the full repayment.
It would not be a big issue, especially if you are also paying off other liens placed on other business assets. However, removing the filing can become an urgent matter if the business owner plans to seek more funding from other lenders.
Understanding what to do about UCC lien issues
Challenges involving UCC liens sometimes require legal action to get lenders to do their part in removing the filing or addressing disputes. Consider seeking experienced insight when these filings begin to get out of hand. It might not guarantee a favorable outcome, but it can help determine the most appropriate course of action based on what arrangements exist with the lender.