Guide
MCA liens: how merchant cash advance UCC filings work
Most merchant cash advance funders file a UCC-1 financing statement against the merchant's business when they fund. An MCA is usually written as a purchase of the business's future receivables, and Article 9 of the Uniform Commercial Code covers sales of receivables, so the funder files to protect its interest and to put other funders on notice. The filing usually claims receivables or all business assets, and it sits in the state where the business was formed.
Why MCA funders file a UCC-1
Article 9 covers the deal. The UCC applies not only to loans secured by assets but also to sales of accounts and payment intangibles (UCC § 9-109(a)(3)). A funder buying a share of future receivables is that kind of buyer.
Filing protects the funder's place in line. A buyer of accounts generally perfects its interest by filing a financing statement (§ 9-310), and between competing claims, the first to file or perfect usually comes first (§ 9-322(a)(1)).
It's a public warning. Anyone searching the merchant's state sees the filing, which tells the next funder that someone already claims the receivables.
What an MCA filing looks like
The debtor is the business, under its legal name. The secured party is the funder, or a filing service such as Corporation Service Company acting as its representative, which is why an unfamiliar name often appears there.
The collateral usually reads "all accounts" or "all assets" of the debtor. The filing is often made within days of funding, and like any UCC-1 it runs five years unless continued or terminated (UCC § 9-515), which is usually longer than the advance itself.
In the record
- Debtor
- The merchant's business
- Secured party
- The funder, or a filing service for it
- Collateral
- Receivables, or all assets
- Lasts
- Five years unless continued or ended
How stacking shows up
Stacking is a merchant taking a new advance while earlier ones are still being repaid. In UCC records it usually looks like several active filings from different funders within a few months, all claiming receivables or all assets. Assignments, where a filing moves to another company, can mean a position was sold or refinanced.
A clean search isn't proof of no stacking: not every funder files, and filings can take days or weeks to appear. Bank statements still show the daily or weekly debits. More on spotting stacking.
After the advance is paid off
Paying off the advance doesn't remove the filing by itself. The merchant asks the funder to file a UCC-3 termination; once the obligation is satisfied, the funder must do so within 20 days of a signed demand (UCC § 9-513(c)). How to remove a UCC lien.
A funder refinancing or consolidating earlier advances often asks for those terminations as a condition, so the new position isn't behind older filings.
Where to search
Search the state where the business was formed, not where it trades: a Delaware LLC selling in New Jersey has its filings in Delaware (UCC § 9-307(e)). Search the exact legal name from the state's business record. Find any state's UCC search, or search by business or lender with Clerkfield's lien search.
General information about the Uniform Commercial Code as adopted across U.S. states, not legal advice. State versions can differ in details; for a specific filing, ask a lawyer in the state where it was filed.