UCC-1 (Legal Definition: All You Need To Know)

What is UCC-1?

How does the UCC Financing Statement work?

What are the essential elements you should know!

Keep reading as we have gathered exactly the information that you need!

Let’s dig into our UCC filing knowledge!

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What Is A UCC-1

A UCC-1 statement (or just UCC-1) refers to a legal notice creditors file to publicly announce their legal rights against the property of a debtor.

UCC stands for “Uniform Commercial Code” and the UCC-1 financing statement is governed by Article 9 of the UCC titled “Secured Transactions”.

The UCC-1 Financing Statement is generally referred to as UCC-1 Filing.

These two terms are used interchangeably.

The purpose of this notice is for a creditor to announce its rights to collateral on secured loans.

Should the debtor default on its loan, the creditor will have the right to foreclose, seize, or sell the underlying collateral property.

The creditor files the UCC-1 notice with the secretary of state of the borrower’s residential state or the state where a company is incorporated or organized to “perfect” its security interest against collateral security.

This process is called “perfecting its security interest” on a secured loan.

Once the security interest on the loan is perfected, the creditor is assured that it has the ability to take recourse against the borrower’s designated property in case of nonpayment on loan.

Purpose of Filing

A UCC 1 Filing can be done for either a specific asset like a real estate property or any other type of movable asset like equipment, tools, or goods.

These filings are quite common with small businesses and small business loan products.

Whenever you are approved for a small business loan, the financial institution or your lender will file a Form UCC-1 to announce its lien based on the secured loan granted to you.

When the creditor files a UCC 1 filing form, it announces to the public that it has a lien on your property and that it can eventually seize, foreclose, or sell the underlying collateral in the event of default on loan.

When To File A UCC 1 Form

Typically, the UCC-1 filing takes place around the same time that the loan is granted.

The creditors will not take long to file their UCC Financing Statement Form as their objective is to secure their security interest before other creditors file a UCC-1 against the same asset.

For example, if you are taking a loan for equipment, machinery, or property with several lenders, the lender that filed the UCC-1 first will have first priority.

The lender who files the UCC 1 Form second will have the second priority interest.

In the event of a foreclosure or sale of the property, the first lender’s claim must be fully satisfied before the second-position lienholder can receive any money.

Many lenders restrict or prohibit the borrower from obtaining loans or offering the same property as a security interest to another creditor to avoid this risk.

Benefits of UCC 1

What are the benefits after filing a UCC-1?

The benefit of filing a UCC 1 by a creditor is that it is able to acquire a relative priority over other creditors dealing with the same borrower.

By giving a public notice using a UCC-1 form, the creditor lets the world know that it has the right to take possession of the underlying asset in case the borrower defaults on its loan.

The UCC 1 creditor has therefore a certain priority over the other creditors.

Legally speaking, the creditor will have the ability to enforce the lenient in a state court with ease.

For the borrower, the benefit of accepting a UCC 1 filing is to access a small business loan or debt financing that may not otherwise be possible.

Drawbacks of UCC 1

For the creditor, a UCC-1 brings little to no drawbacks.

In essence, the creditor benefits from filing a UCC-1 as it will obtain the first-ranking security on movable property, asset, or property.

The drawbacks of the UCC-1 Financing Statement lie more on the borrower.

In essence, the borrower is giving an asset as collateral to a lender and agrees that should there be a loan default, the creditor can exercise legal rights on the property.

Small businesses may also be prevented from securing additional loans and borrowings by giving a valuable asset as collateral to a creditor.

In fact, many creditors will not accept to be in a second-ranking position when filing their UCC 1 lien.

Furthermore, a UCC 1 lien will appear on your credit report for a period of about five years.

The information appearing on your credit report does not hurt your score, but it will dissuade some creditors from doing business with you.

Another drawback for a small business is that the business operations can also be jeopardized if the creditor sells the equipment or business asset in case of a loan default.

Types of Lien

UCC 1 serves as a lien on secured collateral relating to a business loan under the Uniform Commercial Code.

Lenders and creditors can elect between two types of fillings:

  • Specific collateral lien
  • Blanket lien

A specific collateral lien represents the most common type of lien in real estate transactions.

A UCC lien against specific collateral is a preferred type of lien when the asset can be specifically identified.

The blanket lien provides flexibility to the lender to secure a lien on different types of assets outlined in the UCC 1 form.

This type of lien is commonly used by banks and alternative lenders or loans issued by the Small Business Administration (SBA).

They are the preferred type of lien as they can be used to secure many assets.

UCC Form

The information on the UCC 1 Financing Statement can include:

  • Lender’s name
  • Lender’s address
  • Borrower’s name
  • Borrower’s address
  • Description of the collateral 

Here is an example of the UCC Financing Statement in the state of New York:

UCC-1 - New York UCC Financing Statement

UCC Search

Before getting a loan where your lender may file a UCC 1, you have the ability to research your lender to see their UCC 1 filings.

By doing research, you can see if they are in the habit of filing a UCC 1 and get other useful information.

In every state, you can perform a UCC search by either going to the Secretary of State’s website or the agencies mandated to manage the UCC filings.

Frequently Asked Questions

How to file a UCC 1

The UCC 1 is typically filed by the lender when granting you a loan.

The filing will be done in the state where you reside or where your company was incorporated or organized.

When the filing is done, the creditor will have “perfected its security interest” on the collateral property and can claim rights against it.

For example, in Texas, you can file your Texas UCC1 Filing by going to the Texas Secretary of State’s website.

There, you have access to the Form UCC1 (initial filing), the UCC1Ad (addendum), and UCCAP (Additional Party).

UCC-1 - Texas UCC1 Filing

What are the benefits after filing a UCC 1

For the creditor, the benefits are that the filing of a UCC 1 allows the establishment of its priority on the collateral asset in the event the debtor defaults on loan.

This means that should the borrower fail to respect the obligations of the loan, the creditor can exercise its security interest over the asset underlying the collateral.

How much does it cost to file a UCC 1 Financing Statement

Every state will have its fees relating to the UCC-1 Filing.

Generally speaking, you can expect between $10 to $25 per filing.

How long does a UCC 1 Filing last

A UCC-1 filing will last five years.

After the expiration of the five-year term, the UCC filing will be expired and will no longer produce any legal effects.

A creditor must extend the UCC 1 filing before the end of the five-year period to ensure the lien remains in effect.

Otherwise, the lien will expire and the “secured creditor” will become an “unsecured creditor”.


So what is a UCC-1 form?

Let’s look at a summary of our findings.


  • The Uniform Commercial Code Financing Statement 1 (or simply UCC-1) is a legal notice allowing a creditor to announce its rights on a secured collateral
  • There are two types of UCC-1 liens, against specific collateral (like equipment) or against multiple assets (blanket lien)
  • The advantage for the UCC 1 filing is to protect the creditor’s interest offering it the ability to take recourse against the property by foreclosing it, seizing it, or even selling it 
Blanket lien
Buying vs leasing 
Commercial real estate loan
Continuation statement
Credit report 
Credit risk
Perfected lien
Risk Management
Secured loan 
Security interest 
UCC Filing
UCC Financing Statement
UCC Search
Secretary of state 
UCC-3 termination 
Uniform Commercial Code