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 Rhode Island, when a business obtains a loan and the lender takes a security interest in the business's assets as collateral, a UCC-1 financing statement is often used. This document, once completed and properly filed with the Rhode Island Secretary of State's office, serves as a public notice that the lender has a priority interest in the specified assets. This filing is crucial because it alerts potential buyers and future creditors to the lender's secured interest. The process is governed by Article 9 of the Uniform Commercial Code (UCC), which applies to secured transactions involving various types of collateral, including vehicles, office equipment, inventory, investment securities, accounts receivable, machinery, and letters of credit. The UCC-1 filing helps establish the lender's legal claim over the collateral in the event of default or bankruptcy.