For many small business owners, access to fast funding can feel like a lifeline. However, when that lifeline becomes a legal entanglement, such as a 24 Hour Capital UCC Lien, it’s crucial to understand your rights, risks, and legal remedies. A UCC (Uniform Commercial Code) lien filed by a merchant cash advance (MCA) lender can tie up your assets and restrict your ability to secure additional financing. This guide explores how these liens work, what consequences they carry, and the steps you can take to protect your business.
What Is a UCC Lien?
A UCC lien is a public notice that a creditor has a legal interest in some or all of a borrower’s assets. These filings are common in merchant cash advance agreements, where funders like 24 Hour Capital secure their position by placing a UCC-1 statement on the borrower’s business assets. While this doesn’t mean they’ve taken your assets outright, it gives them a strong legal foothold in claiming rights if you default or attempt to refinance.
The Business Impact of a UCC Lien
The moment a UCC lien is filed, your ability to grow your business or seek other financial solutions can be severely hindered. Potential lenders or partners might see the lien as a red flag, interpreting it as financial instability or over-leveraging. It can also lead to:
- Difficulty obtaining traditional loans
- Asset seizure in case of legal action
- Damaged business credit
- Limited business expansion opportunities
Understanding the weight of this filing can help you respond proactively rather than reactively.
Is the Lien Valid?
Not all UCC filings are legally sound. Some funders may file a lien even when it wasn’t clearly agreed upon in the contract. In other cases, the lien could remain long after the obligation has been satisfied. Business owners should review:
- The original contract to check for lien language
- State UCC records to confirm the exact filing details
- Payment records that may show the lien is no longer valid
Identifying discrepancies can be a strong starting point for negotiating its removal or taking legal action.
Options for Addressing a UCC Lien
There are several legal strategies you can explore if you’re dealing with a UCC lien filed by an MCA lender:
1. Negotiate a Settlement
If you’re currently in default or on the verge of it, negotiating a lump-sum settlement can be one way to resolve the lien. However, this often requires skilled negotiation and legal leverage.
2. File a UCC Termination
If you’ve satisfied the obligation, the lender is required to file a UCC-3 termination. If they fail to do so, you can initiate a request through your state’s secretary of state office—backed by legal counsel if needed.
3. Challenge the Lien Legally
In cases where the lien is improperly filed or constitutes predatory lending practices, legal action may be the best route. This could include a declaratory judgment, breach of contract lawsuit, or motion to vacate in court.
What About Other MCA Lenders?
If you’re also dealing with similar filings—like a 24/7 Capital UCC Lien—your situation may be more complex. Multiple liens can further restrict your financial options and require a broader legal approach to resolve. Each lien must be addressed based on its origin, validity, and impact on your current financial standing.
Legal Help Can Make a Difference
Trying to navigate UCC liens and aggressive funders alone can leave you vulnerable to exploitation and asset loss. Seeking professional legal support gives you the clarity, protection, and advocacy your business deserves.
Conclusion: Turn Legal Knowledge into Business Power
When facing a UCC lien from aggressive merchant cash advance funders, having the right legal partner can make all the difference. Grant Phillips Law has extensive experience in defending businesses against MCA lenders and guiding them toward financial relief without resorting to bankruptcy. If you’re struggling under the weight of a UCC lien or need help restructuring your obligations, now is the time to explore your legal options and take back control of your business future.
