💡 Summary #
Before funding your invoices, Factor & Fund runs a UCC (Uniform Commercial Code) search to confirm that no other lender, bank, or factoring company has a legal claim over your receivables.
This ensures your invoices are free, clear, and fundable — protecting both your business and your funding line.
⚙️ What Is a UCC Search? #
A UCC search is a public record lookup through the Secretary of State’s database in your state of incorporation.
It shows whether any UCC-1 filings exist against your company.
A UCC-1 filing is a legal notice that another party (such as a lender or factor) has a security interest in your assets or invoices.
🟦 In short: it tells us if your invoices are already pledged elsewhere.
🧩 Why It Matters #
- Avoids Conflicts: Ensures Factor & Fund has a first position on your receivables.
- Prevents Double Funding: Stops two companies from financing the same invoices.
- Confirms Ownership: Verifies your business legally owns the receivables being sold.
- Maintains Compliance: Required for secured transactions.
✅ This step protects everyone involved — you, your buyers, and Factor & Fund.
⚖️ How We Perform the Search #
- Locate your filing jurisdiction:
We search your business’s state of incorporation or registration. - Search using your legal entity name or EIN:
This ensures we find any active or terminated liens. - Review all filings:
We check for open UCC-1s that reference “accounts receivable,” “invoices,” or “all assets.” - Confirm lien status:
- Active lien: May need a release, subordination, or termination.
- Terminated lien: Safe to proceed.
📊 Example UCC Search Outcome #
| Result | Meaning | Action |
|---|---|---|
| No active liens | Receivables are clear | ✅ Funding approved |
| Active UCC-1 lien | Another lender has a claim | 🔒 Request subordination or lien release |
| Blanket lien (“all assets”) | Bank loan covers receivables | ⚠️ Case-by-case review |
🧾 When a Lien Exists #
If a lien is found:
- Factor & Fund contacts the existing lender for a subordination agreement or release.
- You may need to sign a short consent form authorizing communication.
- Once cleared, we proceed with funding as usual.
🟢 Most liens are easily resolved within 1–2 business days.
✅ Benefits to You #
- Protects your business from legal disputes
- Ensures your invoices can be funded legally
- Speeds up approval for future invoices
- Builds lender and buyer confidence
❓ FAQ #
Do UCC searches affect my credit?
No. It’s a public record lookup, not a credit check.
Can I check for UCC filings myself?
Yes. You can search your Secretary of State’s website anytime using your company name.
Do you file a UCC lien after funding?
Yes — Factor & Fund files a UCC-1 statement only on the invoices you sell, not on your entire business or assets.
