Will an MCA's UCC Filing Stop Me From Getting a Bank Loan?
It can complicate a loan, but it rarely blocks one permanently. A bank will want an active funder's filing paid off or subordinated, and a filing left behind after payoff should be terminated so the bank sees a clean record.
What does a UCC filing do?
A UCC-1 financing statement puts the public on notice that a funder has a claim on certain business assets, often receivables. Banks search these records before lending. If they see a filing, they want to know whether it's active and what it covers.
How does an active filing affect a bank loan?
If the advance is still being paid, the bank has to decide how to handle the funder's claim. Common approaches:
- Pay off the advance at closing and have the funder file a termination.
- Ask the funder to subordinate, meaning agree that the bank's claim comes first.
- Structure the loan around the existing filing, which is less common.
Do old filings from paid-off advances matter?
Funders don't always file terminations after an advance is paid. A stale filing looks active to a bank. Ask the old funder to file the termination and send you a copy. The UCC lets a debtor demand a termination once the obligation is satisfied.
Why do blanket filings worry banks?
Some funders file broad descriptions that cover all business assets. A blanket filing can matter more to a bank than a narrow one, because it overlaps with the collateral the bank wants. Read the filing's collateral description so you know what it covers.
How do you prepare before applying?
Search your business's UCC records through your state's filing office before you talk to a bank. List each filing, whether it's active and its status. Gather zero balance letters for paid off advances. That gives the bank a clean picture from day one.
Is this legal advice?
This is general information, not legal advice. Filing rules and lien priorities follow your state's version of the UCC.
When should you apply for the loan?
Terminations take time to appear in state records. Start the cleanup well before you ask for a loan.
What is a subordination agreement?
If a bank wants to lend while an advance is still active, it sometimes asks the funder to sign a subordination agreement. That document says the bank's claim comes first on certain assets. Some funders agree, especially if the bank's loan improves the business's cash flow. Others refuse. It's a negotiation between the bank and the funder, and you're the one who usually has to start it.
How do you keep the record clean going forward?
Every time an advance ends, confirm the termination is on record within a few weeks. Treat it like a routine task on your checklist, and your UCC record will stay easy to explain.
How can Afterfirst help with this?
Call 877-FUND-654 if you're preparing for a bank loan and have filings from advances. We'll help you request terminations and payoff letters so your record is ready.
What else do owners ask about this?
- How do I find UCC filings on my business?
- Can I get a bank loan after taking a merchant cash advance?
- Does my spouse have to sign the personal guarantee on an MCA?
More short answers on this topic are on the credit and liens FAQ, and the MCA apr calculator runs the numbers for your own file.
Have a question we didn't answer?
Ask us on the call. Call 877-FUND-654 with any question. We call you back, usually the same business day, and we always talk with you before we shop your file.