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 Mississippi, 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 Mississippi 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 UCC-1 filing is crucial because it establishes the lender's priority over the assets in question, which is important in the event of default or bankruptcy. Article 9 of the Uniform Commercial Code (UCC) governs these secured transactions, and it outlines the standards for creating a valid security interest, the filing process, and the priority of claims. Assets commonly used as collateral include vehicles, office equipment, inventory, investment securities, accounts receivable, machinery, and letters of credit. It is important for businesses to understand that the filing of a UCC-1 statement by a lender can affect their ability to use those assets as collateral for future loans and may impact the sale of those assets to third parties.