UCC Filings: The Ecommerce Founder’s Guide

What Is a UCC Filing?

UCC-1 Financing Statements (“UCC-1's” are often referred to as a “UCC” or “UCC filing”) provide public notification of a creditor’s interest in a debtor’s personal property. A UCC filing is a public notice filed under the Uniform Commercial Code (UCC) laws of the applicable jurisdiction and is common practice in lending relationships with debtors. People may use the term “UCC” to refer to both the Code as well as the UCC-1 Financing Statement.

UCC filings are a common practice in growth capital funding, including revenue-based financing, because they help protect the financing providers, while creating transparency around outstanding claims on a company’s assets. Since these filings are public records, other creditors can search and determine whether a business already has existing UCC filings and which creditor has priority if multiple creditors are involved.

How Does a Creditor File a UCC?

In order for a creditor to enforce its rights against the debtor’s personal property, the creditor must have a perfected security interest. To be perfected, the creditor must satisfy certain requirements as set out in the UCC, including filing a UCC-1 in the appropriate filing office. 

Once a security interest is perfected, the creditor or funding partner who is lending or advancing capital is considered a secured party and has protection in the event the debtor encounters financial difficulties that make it difficult or impossible to pay the secured party or goes bankrupt. 

If this happens, the secured party gets priority over other creditors who also may be owed, effectively securing their “place in line” if a court divides the debtor's assets amongst other lenders. If the creditor has not filed a UCC-1, they must wait to receive what is owed to them after all other secured creditors have collected their assets.

UCC-1’s are filed under the UCC laws of the applicable jurisdiction and the Uniform Commercial Code ensures a consistent legal environment and clear guidance for businesses that operate in the United States, including across state lines. While the UCC isn’t federal law, the code has been adopted by all 50 states.

How Long are UCC Filings Good For​?

UCC filings automatically expire five years from the date of filing unless it is extended within six months from the date of expiration. Once expired, the creditor is generally considered unsecured.

Is a UCC Filing Bad for Ecommerce Brands?

A UCC filing is not inherently “bad.” It’s a normal legal step in secured lending relationships. Banks and other traditional financial partners typically require a UCC filing  to provide public notice of its security interest in a debtor's assets. 

Although UCC filings do not affect the day-to-day financial operations of an ecommerce business, a UCC-1 will appear on your business credit report and can result in an increase in a business’ credit utilization ratio. This may impact your business’s credit score and make it harder to get capital from other funding partners since they may be less likely to want to get in the “back of the line” behind other secured creditors.

For example, say a brand sells housewares and furniture online. It borrows from a local bank, and that bank files a UCC-1 on the brand’s inventory. Depending on the circumstances, financing partners will use floating liens or blanket liens, which provide them a claim on either a portion or category or ALL of a company’s  assets. 

With limited credit history and few or no other assets to pledge, the business may not be able to access additional options for working capital. Floating liens can even justify delivery stoppages from suppliers in the event that a business does not pay.

The good news is that UCC filings aren’t permanent. Once your business has completed its payments to a creditor, you can take specific steps to officially remove the UCC filing from your credit report and record before the five-year period is up. 

How Do You Know If You Have a UCC-1?

Since UCC-1 filings can affect future financing options, it’s important for DTC founders to know how to identify them. Here are four steps to determine whether your business has a UCC-1 filed against it:

1. Review your existing loan documents for UCC language 

​​Start by reviewing the details of any current funding agreements. Look for references to UCC filings or security interests, including information such as the debtor (your business), the creditor (the lender or funding partner), collateral descriptions, or references to UCC financing statements or amendments.

2. Run a UCC search on your business

UCC filings are public records, which means you can search for them directly. Visit the Uniform Commercial Code division of the Secretary of State’s website in the state where your ecommerce business is incorporated or where your assets are located, then search for your business name to see whether any UCC filings exist. 

3. Ask lenders what type of UCC they file and when

If you’re considering additional funding partners, ask them directly about their UCC practices. Understanding these details can help you avoid unexpected restrictions on future funding. Key questions may include:

• Do you file a blanket UCC or a limited scope UCC?
• When is the UCC filing submitted, before or after funding is provided?
• When is the lien removed?
• Will the funding partner remove the lien once payments are complete?

4. Plan your 12–24 month capital strategy to understand how the lien affects future financing

A UCC filing can sometimes make securing additional working capital more complex. To avoid surprises, plan your capital strategy 12–24 months in advance. Forecast your financial needs and growth plans so you can secure the right financing partners without limiting future flexibility.

Common UCC Types and What They Mean for Founders

When it comes to UCC filings, not all filings affect businesses the same way. Let’s break down the key differences between different UCC-1s and what they mean for ecommerce brands.

What Is Clearco’s Approach to UCCs?

At Clearco, we understand that not all UCC filings are created equal. As a flexible capital partner, we fund ecommerce businesses that already have UCC filings on record and don’t treat an existing filing as an automatic disqualifier. 

By evaluating each filing holistically, we can collaborate with traditional secured lenders, fitting seamlessly into your existing capital stack so you can focus on business performance rather than collateral.

What Clearco Does Not File

Clearco’s model is designed to grow with your business, not restrict future financing options. In line with this philosophy, here’s what we don’t file:

• No all-asset liens: We don’t claim your inventory, equipment, IP, or other business assets.
• No personal guarantees: UCCs are always business-level only and never tied to your personal assets.

This approach ensures that your business maintains flexibility for future funding while still giving Clearco the security needed to provide growth capital efficiently.

Obtain Capital Without Worry

Understanding the differences and nuances of a UCC filing is essential for ecommerce businesses looking to grow alongside financing partners. Having a UCC-1 on record doesn’t have to be inherently negative or restrictive, especially when working with a flexible funding partner that is invested in the long-term success of your brand. 

By understanding how UCC filings work and how they may affect future financing, you can negotiate funding terms more confidently and choose the option that best supports your business goals.

If you’re navigating funding with an existing UCC filing, or simply want to understand your options, connect with one of our experts today to learn how Clearco can help support your growth.

FAQs

Q: If I have a UCC, can I still get funding with Clearco?

A: Yes, brands with UCCs may still access Clearco funding. Clearco focuses on transparency and flexibility and regularly works alongside other funding partners rather than forcing exclusivity.

Q: Does a UCC mean a lender controls my business?

A: No. A UCC is a notice of a security interest, not operational control.

Q: Why do some founders worry about UCCs?

A: Broad or blanket UCCs can reduce flexibility with future lenders, which is why structure matters.

Q: Do all funding options file UCCs?

A: No, only secured loans typically file UCC-1 financing statements.

Q: Does a UCC automatically stop future funding?

A: Not automatically, but it can influence how future lenders see your collateral availability and risk.