When a lender makes a loan to your business, and in the loan agreement takes a security interest (as collateral) in one or more of your assets, it may include a completed UCC-1 financing statement (UCC-1). A UCC-1 is a document that, when properly filed with the state (often the secretary of state’s office), provides notice to potential buyers of those assets, and notice to future creditors of your business that the earlier lender has a priority interest in those assets. Article 9 of the Uniform Commercial Code governs business or commercial transactions (loans, extensions of credit) that are secured by collateral, and provides for use of the UCC-1 filing. Vehicles, office equipment and fixtures, inventory, investment securities, accounts receivable, machinery, letters of credit, and other moveable, tangible items of value often serve as the collateral for a UCC-1.

In Alabama, when a lender provides a loan to a business and secures the loan with the business's assets, the lender typically files a UCC-1 financing statement. This filing is done with the Alabama Secretary of State's office and serves as a public notice that the lender has a security interest in the specified assets of the business. The process is governed by Article 9 of the Uniform Commercial Code (UCC), which regulates secured transactions involving various types of collateral, including vehicles, office equipment, inventory, investment securities, accounts receivable, machinery, and other tangible items. The UCC-1 filing establishes the lender's priority over the collateral in question, which is important in the event of default or bankruptcy, as it determines the order in which creditors are paid. Future creditors and potential buyers of the business's assets are thus made aware of the existing security interest through the UCC-1 filing.