When you secure a merchant cash advance (MCA), a creditor can file a Uniform Commercial Code (UCC) lien on your business assets. This legal claim acts as a security for the creditor, allowing them to repossess the listed assets if your business defaults.
Discovering a UCC lien against your business can be unsettling and limiting. However, learning what to do afterward can help you protect your business.
Get a copy of the UCC filing
In New York, you can get a copy of the UCC filing by submitting an online or written request through the New York Department of State. Once you obtain it, take note of the creditor’s name, covered assets and filing date.
Assess the validity of the lien
The next step is to review the terms in the UCC lien, such as the following:
- Repayment terms
- Interest rates
- Clauses about default or collateral
Cross-check these terms with the underlying agreement that you have with the creditor to find discrepancies or errors.
Take action to protect your business
For a UCC lien to be valid, it must meet specific legal requirements to be enforceable. If the lien is inconsistent with your agreement, you might have grounds to challenge it.
Navigating UCC liens in the context of MCAs can be complex due to their specific provisions. Consider consulting with an experienced attorney, as they can clarify your concerns. They can also offer advice on avoiding missteps while building a plan to resolve MCA issues.