Results 1 to 15 of 15
-
04-25-2016, 01:41 PM #1jotucker1983Guest
Help Me Understand - Why Are UCCs Still Being Filed On Good Merchants?
I wanted to get some opinions of some of the contributors here on Daily Funder, because this makes absolutely no sense to me. Can someone help me understand, why in the hell are some companies still filing UCCs on good paying merchants?
- When you are boarding a new deal, it's good to have the paperwork with the merchant signed stating that a UCC could (or would) be filed in relation to the funding, but from my understanding, you don't have to file it.
- You could keep the paperwork on hand and only file it in the case of a slow paying merchant, or some other type of collection or fraud issue. This allows you, per the paperwork, to have related favorable conditions in court or during the collections procedure.
The argument could be made that you are looking to establish a certain "position" in terms of the UCC filing, but couldn't this already be diagnosed through the examination of bank statements?
Most companies are doing loan transactions today, whereas in the prior days with majority split payments (standard MCA deals), it would make more sense as to why the UCC would need to be filed because it would be difficult for someone else to know about the transaction.
It just seems completely damn asinine to me, to have a good paying merchant get harassed by 30 damn calls a day by green brokers who can't even spell "merchant cash advance". All this does is piss the merchant off to where they don't want to renew with you (the broker who closed them) anymore.
It's common damn knowledge that this is going on, so why in the hell are these UCCs still being filed on good merchants by many companies today? Can someone help me understand this?Last edited by jotucker1983; 04-25-2016 at 01:44 PM.
-
04-25-2016, 01:46 PM #2
I know my company does not file any UCC'c, unless the client defaults.
-
04-25-2016, 02:00 PM #3
- Join Date
- Sep 2014
- Posts
- 263
Well you have to understand that the law is based on when the UCC is filed in the case of default. The priority order is first in first out and with the amount of stacking being first to get paid makes a difference in the event of default. A UCC-1 financing statement (an abbreviation for Uniform Commercial Code-1) is a legal form that a creditor files to give notice that it has or may have an interest in the personal property of a debtor (a person who owes a debt to the creditor as typically specified in the agreement creating the debt). This form is filed in order to "perfect" a creditor's security interest by giving public notice that there is a right to take possession of and sell certain assets for repayment of a specific debt with a certain priority. Such notices of sale are often found in the local newspapers. Once the form has been filed, the creditor establishes a relative priority with other creditors of the debtor. This process is also called "perfecting the security interest" in the property, and this type of loan is a secured loan. A financing statement may also be filed in the real estate records by a lessor of fixtures to establish the priority of the lessor's rights against a holder of a mortgage or other lien on the real property. The creditor's rights against the debtor and the lessor's rights against the lessee are based on the credit documents and the lease, respectively, and not the financing statement.
-
04-25-2016, 02:04 PM #4
- Join Date
- Jun 2015
- Posts
- 3,322
-
04-25-2016, 02:05 PM #5
- Join Date
- Jun 2015
- Posts
- 3,322
-
04-25-2016, 02:17 PM #6
-
04-25-2016, 02:44 PM #7
- Join Date
- Nov 2013
- Posts
- 598
Large funding companies are backed by major funds, those funds have covenants that the lender must comply with. Most important for the lender is securitizing themselves and/or their shareholders. In these instances its when lending operations are not in line with sales practices.
-
04-25-2016, 03:22 PM #8
- Join Date
- Jun 2013
- Posts
- 351
It is for notification purposes as well. This goes back to when split funding was the primary repayment vehicle and you couldnt see clear as day that there were payments coming out of the bank account. In the event the merchant is trying to hide company A's advance from company B, company B should see the UCC and get clarification prior to funding. Today, the merchant could still be trying to hide it by using multiple bank accounts, doctoring the statements or even just stopping payments.
-
04-25-2016, 03:35 PM #9
- Join Date
- Sep 2014
- Posts
- 263
-
04-26-2016, 12:43 AM #10
- Join Date
- Dec 2015
- Posts
- 17
Bottom Line is if someone is getting unsecured working capital, due to the time use of funds, availability and risk involved it's pretty stupid to not file a UCC.
-
04-26-2016, 08:53 AM #11
- Join Date
- Aug 2015
- Location
- Boulder, CO
- Posts
- 755
While I am not a lawyer, here is another way to look at it:
We have a very strict no-stacking clause in our filed UCC. The client knows it ahead of time. In my opinion, any lender that is considering funding a client should be doing a UCC lien search (would't you if it were your money?). If some short-sighted lender does stack on top of my filed UCC (prohibiting stacking) and it contributes to a default, who do you think I am coming after (in addition to the client)?
-
04-26-2016, 09:07 AM #12
A good merchant yesterday could be a bad merchant tomorrow.
-
04-26-2016, 10:53 AM #13
-
04-26-2016, 10:59 AM #14
- Join Date
- Oct 2013
- Location
- New York, NY
- Posts
- 1,203
-
04-26-2016, 11:17 AM #15
- Join Date
- Nov 2013
- Posts
- 598
Well it happens more often than not if you think about it, its how you define a "Bad Merchant". For me its someone who bounces payments consistently, however they do get back on track and perform well and actually grow as a business from it from time to time.
I even had a merchant default on Pearl due to external circumstances, I gave her a low risk / high reward offer and not only has she performed but she's done much better over the last year Ive funded her.
Otherwise if a merchant just goes radio silent after rejecting, well we know where that goes....
Similar Threads
-
Old UCCs Vs New UCCs
By Tony Zenkewich in forum Merchant Cash AdvanceReplies: 16Last Post: 11-19-2015, 08:59 AM -
Good Brokers Do Not Push Merchants into MCA for Equipment Purchases
By Harrymetrix in forum PromotionsReplies: 0Last Post: 08-26-2015, 12:15 PM -
Help me understand defaults please
By wally in forum Merchant Cash AdvanceReplies: 16Last Post: 07-27-2015, 09:36 PM -
10,000 UCCs from 2014 - $500
By FUNd in forum PromotionsReplies: 0Last Post: 06-24-2015, 11:19 PM -
$300K Deal About to Be Killed ... and I Can't Understand Why
By Quickfunder in forum Merchant Cash AdvanceReplies: 12Last Post: 08-24-2014, 09:08 PM