When a merchant cash advance (MCA) lender takes action on a Uniform Commercial Code (UCC) lien, it can be a stressful experience for small business owners. The lender may claim that the borrower has defaulted on the MCA, and now they are taking steps to collect.
But what if the lender’s claims are inaccurate or exaggerated? If a borrower wants to challenge the lender’s actions, what evidence must they gather to strengthen their dispute?
The required written notice
According to the UCC, a lender is required to provide a written notice to the borrower before enforcing a UCC lien, such as selling or disposing of the borrower’s assets. If the lender fails to provide the proper notice, the borrower can raise it as a point of contention.
The MCA agreement and UCC lien filing
The agreement outlines the terms of the MCA, while the UCC lien filing provides details about the assets that the lender has a security interest in. Borrowers should review these documents to confirm if the lender’s claims are accurate.
Communication with the lender
Additionally, all communication with the lender can be vital evidence as it can demonstrate the lender’s behavior. Borrowers should keep a record of all phone calls, emails and letters exchanged with the lender. This communication can help establish whether the lender has acted in good faith or if they have engaged in unfair practices.
Financial records and payment history
Borrowers should also gather their financial records and payment history to challenge the lender’s claims. This includes bank statements, invoices and receipts that show payments made on the MCA. By comparing these records to the lender’s claims, borrowers may be able to identify inaccuracies.
Fighting for fairness in the MCA landscape
UCC lien disputes highlight the importance of fairness in the MCA landscape. Borrowers have rights and options to defend themselves against lenders, but the process of disputing a UCC lien action can be taxing. With legal advice, borrowers may better navigate the complex process and fight for their businesses while ensuring that their rights are protected.