Merchant cash advances (MCAs) can be a lifeline for small business owners across the country, as well as in New York. This system offers access to quick cash for when entrepreneurs are in a pinch. However, MCAs are not considered commercial loans and face far less regulation than similar counterparts.
Due to this lack of oversight, an unresolved Uniform Commercial Code (UCC) lien may continue to list your assets as collateral even though you already paid off your MCA. An active UCC filing can prevent you from acquiring new financing and leave your property vulnerable to aggressive collectors. Understanding your options to address this is a first step in clearing this financial hurdle.
Request the lender to file a UCC-3 termination statement
If you have cleared your MCA, you may send the lender a written request to terminate the UCC filing. Creditors are generally required by law to file this within 20 days of receiving a formal demand after full repayment. Some essential information to put in your formal appeal include:
- Your business name
- The original agreement number
- Your employer identification number (EIN)
- The date of your final payment
- A request to receive a stamped termination form copy
Once the other party confirms the filing, you may verify the lien’s termination status after about a week through your Secretary of State’s UCC search portal .
What do to if the lender does not cooperate with you
If your MCA funder refuses or fails to file the termination on time, you may register the UCC-3 form yourself. When submitting your own documentation to the Department of State, it should typically include:
- The original UCC-1 file number
- Final payment receipt and relevant bank statements
- Proof of your termination request from the lender
- A sworn statement that your MCA debt is fully settled
While filing the termination yourself is a more peaceful route, it may not be a viable solution if conflicts arise between you and the lender.
If you cannot contact the other party or are facing significant financial losses from this unremoved lien, legal intervention might be necessary. A lawyer can assist you in removing the UCC filing or in pursuing damages from the lender.
Protecting your integrity and assets
Clearing any active UCC filing is essential to confirm the settlement of your MCA agreement. A clean public record maintains the credibility of your business and can be a pathway to better financing opportunities in the future.