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 New Jersey, when a lender extends 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 Secretary of State's office, to provide public notice that the lender has a security interest in the collateral. This notice is important because it informs potential buyers of the assets and future creditors of the business about the existing secured interest, which can affect the priority of claims in the event of default or bankruptcy. Article 9 of the Uniform Commercial Code (UCC) governs these types of secured transactions and the use of UCC-1 filings. Collateral for a UCC-1 can include various assets such as vehicles, office equipment, inventory, investment securities, accounts receivable, machinery, and letters of credit. The proper filing of a UCC-1 is crucial for the lender to maintain a priority claim over the secured assets.