Refinancing business debt can improve cash flow and reduce financial stress, but an active UCC lien from a merchant cash advance (MCA) can make that process more complex. Knowing how the lien affects your refinancing options can help you plan your next move wisely.
How an MCA lien impacts refinancing
When an MCA lender files a UCC-1 financing statement, it publicly records a security interest in your business assets. This notice alerts other lenders that the MCA provider has a legal claim on your collateral. Because of this priority interest, new lenders often hesitate to issue financing or may require higher rates or stricter terms until the lien is resolved.
Options for refinancing with an active lien
Even with a UCC lien on file, refinancing can still be possible. Some lenders may agree to subordinate their lien position or accept partial collateral if you demonstrate consistent revenue and sound business operations. You can also negotiate with your MCA lender to settle or pay down the balance in exchange for filing a UCC-3 termination statement. While each lender’s policies differ, showing a strong repayment history improves your chances.
How to prepare before refinancing
Before applying for refinancing, review your business’s UCC filings through the Secretary of State website. Confirm which lenders have active claims and verify whether older liens should have been released. Collect recent financial statements and payment records to strengthen your application. If feasible, paying off the MCA balance first can prompt a lien release and make refinancing easier.
Building a clear path to better financing
An active UCC lien can temporarily limit your options, but it doesn’t have to prevent refinancing altogether. With accurate records, steady cash flow, and communication with both your current and potential lenders, you can find a practical route toward better funding terms.