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UCC liens from MCA funders: how they hurt you and how to get them released

Every MCA you signed almost certainly produced a UCC-1 filing against your business, and those filings outlive the problems you can see. They block refinancing, spook lenders, and let funders reach your customers. Here is how to find them, what they really do, and how to get them off.

What the filing actually is

A UCC-1 financing statement is a public notice, filed with your state's Secretary of State, that a creditor claims a security interest in your assets. MCA funders typically claim everything: receivables, inventory, equipment, deposit accounts. The filing itself seizes nothing, but it establishes priority and it is public.

Two practical harms follow. First, any bank, SBA lender, or factor that searches your name sees the filings and either declines or demands subordination. Second, a funder in default posture can send notices to your account debtors, your customers, directing them to pay the funder directly, which is both a cash-flow attack and a reputation hit.

Find every filing before you negotiate

Search your state's Secretary of State UCC database (free in most states) for your legal entity name and any DBAs. Stacked owners are routinely surprised: filings from funders long paid off, duplicate filings, even filings from brokers who never advanced a dollar. Build the list first; every one of them is a negotiation item.

How releases actually happen

A proper settlement agreement obligates the funder to file a UCC-3 termination within a stated window after final payment, and gives you the right to file it yourself if they fail. That last clause matters: collections departments are diligent about filing liens and lazy about terminating them.

After final payment, verify. Pull the state record again two to four weeks later and confirm the termination is on file. If it is not, send written demand citing the agreement; funders who ignore termination obligations after being paid are exposed under UCC Article 9's own remedy provisions, and they know it.

The settlement mistake that leaves liens alive

Paying a discounted balance without a written release clause is the classic error. The debt is compromised, the funder loses interest, and the filing sits on the record for its full five-year life, blocking your refinance two years later when the funder's phone number no longer answers. No release language, no deal, that rule has no exceptions worth making.

Common questions

How long does a UCC lien last if nobody removes it?

Five years from filing in most states, and the funder can renew it. Waiting out the clock is rarely a plan; termination through settlement or demand is.

Can I get financing while MCA UCC liens are on file?

It is hard. Most lenders require first position or clean records. Some will lend against a payoff-and-release arranged at closing, which is another reason your settlement paperwork must nail the release mechanics.

A funder I finished paying years ago still has a filing. What do I do?

Send a written demand for termination under UCC 9-513; the funder generally must file or authorize termination within about 20 days once the obligation is satisfied. If they ignore it, you can file a UCC-3 with an explanation, and an attorney letter usually resolves it faster than that.

Takeaway

Liens outlive debts. List every filing before negotiating, put release language in every settlement, and verify the terminations actually hit the public record.