Merchant cash advances (MCAs) have become a common form of financing for small businesses seeking quick access to capital. However, the aggressive collection practices that often follow default—including the use of UCC liens—can be devastating. For business owners looking for ways on how to fight a merchant cash advance, it’s essential to first understand what a UCC lien is, how it affects your operations, and what legal defenses may be available.
What Is a UCC Lien?
A UCC (Uniform Commercial Code) lien is a legal claim filed by a lender or funder to secure repayment of a loan or cash advance. When you accept an MCA, the funder typically files a UCC-1 financing statement with the Secretary of State to protect their interests. This document publicly establishes their right to collect certain business assets if you default on repayment.
Although this filing doesn’t take physical control of your assets, it creates a serious legal cloud over your business. It can interfere with your ability to obtain additional funding, sell assets, or even operate effectively.
How UCC Liens Impact Your Business
The consequences of a UCC lien extend beyond a simple legal filing. Funders may use this as leverage to freeze your merchant processor accounts or bank accounts without warning. These actions can cause immediate disruptions to your cash flow and damage your reputation with customers, vendors, and lenders.
UCC liens can also show up in business credit reports, limiting future financing opportunities. Many banks and lenders view UCC filings—especially those linked to MCA defaults—as red flags that imply financial instability.
Are UCC Liens Always Enforceable?
Not necessarily. While UCC liens are legal instruments, the way they’re used in merchant cash advance collections can sometimes overstep legal boundaries. Some MCA funders file blanket liens covering all business assets—even in cases where such action wasn’t clearly agreed upon in the original contract.
Additionally, some funders file liens without notifying the merchant properly or in ways that may not align with state law. In such instances, challenging the lien’s validity becomes a viable legal defense.
Defending Against UCC Liens
The first step in defending against a UCC lien is reviewing your MCA agreement. Many contracts include confusing or intentionally vague terms that may not hold up in court. An experienced attorney can assess whether the funder followed proper legal protocols in filing the lien.
You may also contest the lien if it contains inaccurate information or if it was filed fraudulently. In some cases, negotiating a settlement or restructuring the repayment terms can result in the release of the lien. If a judgment has already been entered against you due to a default, knowing how to vacate a judgment becomes a crucial step in restoring your financial footing.
Proactive Legal Strategies for Business Owners
It’s important to act quickly. Delays in responding to UCC liens can lead to escalated collection actions, lawsuits, and long-term credit damage. Business owners should document all communications with MCA funders and retain copies of the original agreement and any modifications.
Consulting with legal professionals who specialize in MCA defense ensures that you are not navigating this process alone. With the right legal support, many merchants have successfully challenged improper liens, dismissed lawsuits, and regained control of their operations.
Conclusion: Get Expert Help from Grant Phillips Law
Facing a UCC lien or aggressive MCA collection? You don’t have to go through it alone. Grant Phillips Law is a trusted authority in Merchant Cash Advance Defense, helping business owners nationwide defend against funders, fight UCC liens, and protect their reputations. Whether you’re looking to vacate a judgment, settle an advance, or challenge the legality of a lien, the firm offers personalized legal strategies to get you back on track—without filing for bankruptcy. Reach out today for experienced, focused guidance.
