Uniform Commercial Code (UCC)

LoanBack.com on 03/09/2011

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The 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 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, its 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 States 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.