UCC Filings and Personal Loans

LoanBack.com on 02/16/2011

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The Uniform Commercial Code or “UCC”, as it relates to lending, is a way for each state to have a consistent method of recording the security of a loan. When banks make secured loans, or loans with collateral (e.g., home mortgages), they file a UCC form with the state where the loan agreement is executed. This filing essentially makes the loan security, or collateral, a matter of public record. Without this filing, a lender could run into difficulties laying claim to the collateral in case of default.

Do you need to file a UCC form with the state if you make a personal loan with collateral? It depends. In most cases, it’s enough to simply document the collateral (which you can do using LoanBuilder™) since the lender and borrower know and trust each other. In other cases, it may be appropriate to file a UCC form to give the lender more security in the case of default. If you are interested in filing a UCC form for your personal loan, here are some things you should know:

- The proper UCC form to file is called a “UCC-1” form (there are several other types)
- You can get a UCC-1 form on the Secretary of State’s website for your state
- Many states also allow you to file a UCC-1 form electronically on their website for a nominal fee. Other states require you mail in a paper form

If you are interested in learning more about how to file a UCC-1 form in your state, check out this list of UCC-1 forms by state.

More Information
Uniform Commercial Code (UCC) – Wikipedia