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 Maryland, when a lender provides a loan to a business and secures the loan with the business's assets, a UCC-1 financing statement is often used to establish the lender's priority interest in those assets. The UCC-1 is filed with the state, typically with the Maryland Secretary of State's office, to give public notice of the lender's security interest. This filing alerts potential buyers and future creditors that the lender has a claim on the collateral specified in the UCC-1. 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, and machinery. Proper filing of a UCC-1 is crucial for the lender to maintain priority over other creditors in the event of default or bankruptcy of the borrower.