The UCC Financial Statement is used to guarantee any collateral the borrower is offering up in exchange for a loan or other business arrangement goes to the lender if the loan defaults, according to the Legal Information Institute. This form says this lender is able to retrieve the collateral if need be, even if the lender got two loans and used the same collateral for both loans. It is owed to the lender with the UCC Financial Statement.Continue Reading
The UCC Financial Statement is issued as part of uniform commercial code, or UCC, laws, notes About.com. These laws help to regulate business transactions and selling personal property. They are often used when providing a loan, setting up a contract, or leasing equipment and vehicles. These types of transactions are covered by the UCC, which requires filling out the UCC Financial Statement. However, real estate is not considered part of the UCC rules and regulations.
When a UCC Financial Statement is filled out, it must be signed by both parties, says About.com. If it is for collateral or lending of money, this means the borrower and lender need to sign the paperwork. The form is called a UCC-1 form. Signing of the financial statement is called perfecting the security interest of the property for a secured loan. It prevents the borrower from disposing of, selling or giving away property that is owed to the lender as collateral if the loan defaults.Learn more about Credit & Lending