Quick Summary: A UCC lien is a financing statement MCA lenders file to claim your business assets as collateral. While standard for business financing, a blanket UCC lien can block future credit and allow lenders to contact your customers directly if you default. To remove a UCC lien, you must pay off the debt or work with an attorney to dispute errors or negotiate a settlement.
If you’ve taken out a merchant cash advance (MCA), you likely have a UCC lien on your business credit report. While this is standard for MCAs and other business financing, it can limit your ability to get credit in the future—especially if the filing contains errors. Here’s what you need to know about MCA UCC liens, how they affect your business, and how to remove one.
What Is an MCA UCC Lien?
A UCC lien is a legal claim a lender files against your business assets to secure repayment of a debt. UCC stands for the Uniform Commercial Code, a set of laws that standardize business transactions across states.
When you take out an MCA or business loan, the lender files a UCC-1 financing statement with your state’s secretary of state. This filing publicly declares their right to seize specific assets—or all your business assets—if you default. For MCAs, lenders typically file a blanket lien covering everything: equipment, inventory, accounts receivable, and future revenue.
Most MCA agreements also require a personal guarantee, making you personally liable if your business can’t repay the debt.
What Are the Different Types of UCC Filings?
The type of UCC filing determines which assets a lender can claim. Here’s how they compare:
| UCC Filing Type | What It Covers | Common Use |
|---|---|---|
| Blanket Lien | All business assets (inventory, equipment, receivables, future income) | MCAs, unsecured business loans |
| Specific Collateral | One asset or category (e.g., a specific vehicle or piece of equipment) | Equipment loans, auto financing |
| PMSI (Purchase Money Security Interest) | Goods purchased with the loan funds; gives lender “super-priority” | Equipment financing, vehicle loans |
| Inventory & Receivables | Business inventory and accounts receivable only | Retail, wholesale, invoice financing |
| Fixture Filing | Personal property attached to real estate (HVAC systems, built-in equipment) | Commercial real estate loans |
| Agricultural Lien | Crops, livestock, farm products | Farm loans, agricultural financing |
MCAs almost always use blanket liens, which is why they can significantly impact your ability to obtain other financing.
What Assets Can MCA Lenders Place Liens On?
Under a blanket UCC filing, MCA lenders can claim virtually any business asset, including:
- Equipment and machinery – vehicles, computers, manufacturing equipment
- Inventory – products you have in stock or for sale
- Accounts receivable – money your customers owe you
- Future receivables – payments you haven’t earned yet
- Bank accounts – business checking and savings accounts
- Intellectual property – patents, trademarks, copyrights
Because MCAs purchase your future receivables, the lender technically owns a portion of every payment your customers make—which becomes critical if you default.
How Does a UCC Lien Affect Your Business?
A UCC lien won’t directly hurt your business credit score, but it can seriously limit your financing options and create problems if you default.
Reduced Access to Credit
Other lenders will see the UCC filing when reviewing your application. With a blanket lien already in place, new lenders know they’d be second in line to collect if you default—so many will deny your application or offer worse terms.
MCA Stacking Problems
Some business owners take out multiple MCAs to cover cash flow gaps, but each new MCA adds another lien. This “stacking” creates a dangerous situation: multiple lenders with claims on your assets, daily ACH withdrawals draining your account, and limited options to refinance or consolidate.
Example: A trucking company owner took out three stacked MCAs totaling $180,000 with combined daily payments of $1,400. When fuel costs spiked, the daily withdrawals left insufficient funds for operations. Each lender had filed a UCC lien, blocking access to traditional financing that could have offered lower payments.
Can MCA Lenders Contact Your Customers?
Yes—and this is one of the most damaging consequences of defaulting on an MCA. Because blanket liens cover accounts receivable, MCA lenders can legally contact your customers and demand they send payments directly to the lender instead of you. This can destroy customer relationships and your business reputation.
Why Should You Review Your UCC Filings?
UCC filings sometimes contain errors that can unfairly harm your business. Check your business credit reports from Dun & Bradstreet, Experian, and Equifax for these issues:
- Incorrect dollar amounts
- Vague or overly broad collateral descriptions
- Liens that should have been removed after payoff
- Filings from lenders you don’t recognize
In 2025, some MCA providers have faced regulatory scrutiny for filing inaccurate or overly aggressive UCC statements. If you find errors, you can dispute them with the Secretary of State or contact an MCA attorney for help.
How Do You Remove an MCA UCC Lien?
UCC liens should be removed when you pay off the debt, but this doesn’t always happen automatically. Here are your options:
Request a UCC-3 Termination
Contact the MCA lender and request that they file a UCC-3 termination statement with the Secretary of State. This is the standard process for removing a UCC filing after payoff. Get confirmation in writing.
File Directly With the Secretary of State
If the lender is unresponsive, visit your state’s secretary of state office with proof of payment. You may need to swear under oath that the debt is satisfied and provide supporting documentation.
Dispute Errors With Credit Bureaus
If a terminated lien still appears on your business credit reports, file disputes directly with Dun & Bradstreet, Experian, and Equifax. Include your UCC-3 termination documentation.
When Should You Hire an MCA Attorney?
Consider consulting a merchant cash advance attorney if:
- You’ve defaulted on an MCA and the lender is threatening asset seizure
- An MCA company is contacting your customers for payment
- You have multiple stacked MCAs and can’t keep up with payments
- You need to negotiate a settlement for less than what you owe
- A confession of judgment has been filed against you
- The lender won’t remove a lien after you’ve paid off the debt
An experienced attorney can negotiate with MCA providers, challenge improper collection tactics, and help you explore options like debt settlement or restructuring.
The Bottom Line
MCA UCC liens are standard in business financing, but blanket liens can restrict your credit access and create serious problems if you default. Review your UCC filings regularly for errors, request termination promptly after payoff, and consider legal help if an MCA provider is using aggressive collection tactics.
If you’re struggling with MCA debt or need help removing a UCC lien, call Tayne Law Group at (866) 890-7337 or fill out our contact form for a free consultation. With over 20 years of experience in debt relief, we can help you protect your business and find a path forward.
Frequently Asked Questions
A UCC-1 lien is a significant legal filing that gives a creditor the right to seize your business assets if you default. While it won’t directly lower your credit score, it signals to other lenders that your assets are already pledged as collateral, which can make it difficult to obtain additional financing.
A UCC-1 lien alone cannot freeze your personal bank account. UCC liens apply to business assets used as collateral. However, if you signed a personal guarantee and the lender obtains a court judgment against you, they may be able to pursue personal assets including bank accounts through separate legal action.
Negotiating MCA debt typically requires working with an experienced MCA attorney who understands these agreements. Options may include negotiating a lump-sum settlement for less than you owe, restructuring payment terms, or challenging improper contract provisions. Attempting to negotiate directly without legal guidance often results in less favorable outcomes.
A UCC-1 filing is effective for five years from the filing date. The lender can extend it by filing a continuation statement before it expires. Once you pay off the debt, the lender should file a UCC-3 termination statement to remove it—but this doesn’t always happen automatically, so you may need to follow up.
You can sell a business with a UCC lien, but the lien typically transfers with the assets unless it’s paid off at closing. Most buyers will require the lien to be satisfied before completing the purchase, or the payoff amount will be deducted from the sale proceeds.
