Settling a merchant cash advance (MCA) can bring major relief, but the final payment should not be your only concern. If the funder recorded a UCC financing statement, that public record may still create problems after you resolve the MCA debt.
UCC stands for Uniform Commercial Code, a set of rules that governs certain business transactions and claims against company property. Banks, vendors or potential buyers may interpret the filing as proof that the MCA company still has a claim against your property. That can complicate matters when you pursue financing, sell equipment or prepare to sell the company.
These terms can help prevent unresolved UCC issues from interfering after settlement:
1. A specific deadline for UCC-3 termination
Avoid relying on a verbal promise that the funder will handle the termination. The agreement should set a specific deadline, such as 10 business days after final payment, and require the funder to file a UCC-3 termination statement.
2. The specific record requiring termination
The agreement should list the record number, the state office where the funder recorded it and the specific UCC entry the funder must terminate. In New York, many UCC filings go through the Department of State. However, some companies may have filings in other states, especially if you organized the company outside New York.
3. A release of claims to business assets
The settlement should state that the funder releases any claim to your future card sales, business income, equipment, inventory, accounts and other property covered by the MCA documents. This can reduce the risk that the funder uses prior filings to pressure your company later.
4. Proof and a backup option
Require written confirmation and a receipt once the state processes the termination form. The agreement should also grant written authorization to file the termination form yourself if the funder misses the deadline.
Finalize UCC release terms before settlement closes
After you complete the settlement, the funder may have less incentive to respond promptly to follow-up requests. Putting the release process in writing before the final payment can reduce the risk of chasing old paperwork later. The goal is not only to settle the balance, but to prevent an old MCA filing from delaying your company’s next stage.