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    2 Replies Latest reply on Apr 7, 2009 5:01 PM by phanio

    UCC and its effect on SME financial options.

    SME111 Newbie

      What does UCC affect on SME? Do I need to concern about UCC when I need a loan?I have no knowledge in this. Thank you.
        • Re: UCC and its effect on SME financial options.
          MMMThree Newbie

          Hi - not sure I uderstand your question. The UCC is the uniform commercial code and typically deals with contract/business law. It outlines the requirements when two or more parties contract with each other - sets levels of preformance - and, when a contract is void, voidable, completed, or broken. In lending, some lenders - when they encumber collateral - put a lien on your collateral - they do so within the guidelines of the UCC and file statements with them to the fact. Some lenders will also file blanket UCC liens against all business assets. What this does is shows the courts (should the businesses contracting with each other or lender end up in court) who has what poistion and rights to the property encumbered.

          Let's say that a lender takes your business van as collateral on a loan for the van. You then seek out more money from another lender and they want to take a blanket lien on all business assets. If you defual on any loan - the UCC will recognize that the lender with the first poistion lien on the van will get payment from the sell of the van before the second lien (the blanket lien).

          Hope that helps
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            • Re: UCC and its effect on SME financial options.
              phanio Pioneer
              As stated - the main thing is to understand what you are getting into. If you are talking to a lender and they are asking for a UCC lien on a piece of property of a blanket lien - ask for a copy of the lien documents - then read them over carefully trying to understand the documents from the standpoint of both you and the lender. This way you have a better understanding of the effects it will have on your business. If it all looks greek to you - spend a little bit of money and hire a UCC lawyer for an hour or two. Better to pay a little now in protection then to really pay for it later.

              Best of Luck

              Business Money Today
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