{"id":208256,"date":"2024-12-30T09:00:16","date_gmt":"2024-12-30T17:00:16","guid":{"rendered":"https:\/\/www.nationalfunding.com\/blog\/?p=208256"},"modified":"2024-12-12T14:09:13","modified_gmt":"2024-12-12T22:09:13","slug":"how-ucc-filings-impact-interest-rates-on-business-loans","status":"publish","type":"post","link":"https:\/\/www.nationalfunding.com\/blog\/how-ucc-filings-impact-interest-rates-on-business-loans\/","title":{"rendered":"How UCC Filings Impact Interest Rates on Business Loans"},"content":{"rendered":"

Lenders use UCC filings, which are publicly accessible, to show which assets from your business they can claim as collateral if you default on your small business loan.<\/a> When you\u2019re ready to take a new loan, the new lender will see someone else already has a UCC filing on your assets, making you a higher-risk borrower. Because there is less they can claim if you default, they\u2019ll likely require a higher interest rate on your small business loan.<\/p>\n

UCC filings<\/a> can also lower small business loan interest rates. If your business has grown and you have new assets to use as collateral, allowing the new lender to list this on the new UCC filing makes you a less risky borrower and gives you the power to negotiate a better interest rate.<\/p>\n

As you can see, UCC filings are nothing to worry about. They are common practice and knowing how they work can help you get better interest rates on business loans. Want to learn more? This quick guide to UCC loans and interest rates will help you be prepared to counter high interest rates and negotiate better terms.<\/p>\n

Higher Interest Rates Due to UCC Filings<\/h2>\n

Lenders might charge higher rates when they are the second or third lender to submit a UCC filing, because they have to wait in line to get paid in the event you default.<\/p>\n

The filing date determines a lender\u2019s place in the repayment line, so the first lender to file a UCC gets paid first, and then it progresses in order. The second and third lenders also risk not getting paid at all if the collateral\u2019s value drops and all the money goes to the lenders ahead of them. In order to reduce the risk of not being able to recoup their investment in a default situation, they\u2019ll charge a higher interest rate on the loan.<\/p>\n

Don\u2019t worry if you already have a loan with a UCC filing. You can help keep interest rates down by avoiding \u201cblanket\u201d<\/em> UCC filings, which means the lender filed a general claim against all your assets instead of specific ones. The following tips can come in handy as the UCC filing is being created:<\/p>\n