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, 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.
Want More Information?
To get more information on UCC-1, download a form or even file electronically, select your state:
