UCC-1
A public filing that alerts other lenders to the factoring company's legal claim on the business's receivables. It shows up on a UCC search and can affect other credit relationships.
Why it matters
A filed UCC-1 creates a public lien on listed collateral. Other lenders—including banks and SBA lenders—will find the filing when they search and may require a subordination or payoff before extending additional credit. The scope of the collateral description in the UCC-1 matters: a filing that covers only accounts receivable is narrower than one covering all assets. Review what the factor is filing against and confirm the termination process before signing.
How it appears in contracts
UCC-1 filing authorization is embedded in the security agreement section of the factoring agreement, not filed separately—the agreement itself constitutes the security agreement under UCC Article 9. The factor then files the financing statement at the Secretary of State. Key language to review: (1) the collateral description—'all accounts receivable' is standard, but watch for broader language like 'all personal property' or 'all assets' which creates a blanket lien; (2) the termination clause—most agreements require the factor to file a UCC-3 termination within a set number of days after payoff; and (3) whether the filing is in your state or the state where the factor is incorporated, which differs depending on how the factor structures the security interest.
Related terms
Related reading
Sources
- Uniform Commercial Code Article 9 - Uniform Law Commission. Accessed 2026-05-19.
- Secured Finance Network - Secured Finance Network. Accessed 2026-05-19.