The letter was not sent to your customers for their benefit. It was sent for the funder's.

A UCC-1 financing statement, filed at origination, gives the MCA funder a security interest in your business assets, including accounts receivable. Upon default (or upon the funder's assertion of default, which may not be identical to actual default), the funder may exercise its rights under the lien by contacting your customers and directing them to send payments to the funder rather than to you.

The letter your customer received instructs them to redirect payments. Your customer, understandably confused, calls you. Or worse, complies with the letter without calling.

Assess Whether the Default Has Actually Occurred

The funder may have sent the UCC enforcement notice before a default has technically occurred, or based on a default that is disputed. If you invoked reconciliation and the funder refused, the question of who breached the agreement first may be unresolved. An attorney can evaluate whether the funder's enforcement is premature or unauthorized.

Contact Your Customers Immediately

Do not let the funder's letter be the only communication your customer receives. Speak to each affected customer directly. Explain that the matter is under legal review. Request that payments be held pending resolution. The relationship between you and your customer is your most valuable business asset. The funder's letter threatens that relationship deliberately.

Retain an Attorney to Challenge the UCC Enforcement

A UCC-1 lien is enforceable if it was properly filed and if the underlying agreement supports the scope of the lien. However, the lien may be challengeable if the filing was defective, if the scope exceeds the agreement's terms, if the agreement is reclassifiable as a loan (which may affect the enforceability of the security interest), or if the funder's enforcement is premature.

An attorney can also file an injunction to prevent further customer contact while the dispute is being resolved.

Document Every Customer Communication from the Funder

Request copies of the letters from your customers. Preserve them. Note the date each customer received the letter and whether any customer complied by redirecting payments. This documentation supports a potential claim for tortious interference with business relationships if the funder's enforcement was improper.

Do Not Redirect Revenue to Avoid the Lien

The instinct to route revenue through different channels (new accounts, different processors, alternative payment methods) to avoid the funder's claim is understandable. It may also constitute fraudulent transfer, depending on the jurisdiction and the circumstances. An attorney can advise on permissible asset protection measures.

File a Reconciliation Request if You Have Not Already

The funder's UCC enforcement presumes a valid default on a valid agreement. If the agreement's reconciliation clause was never honored, the agreement may be reclassifiable as a loan, and the security interest that supports the UCC enforcement may be unenforceable.

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The lien is only as strong as the agreement behind it. The agreement may not be strong at all.

Consider Whether the Funder's Conduct Supports Counterclaims

A funder who contacts your customers and directs them to redirect payments has taken an action that, if unauthorized or premature, may give rise to claims for tortious interference, conversion, or unfair business practices. These counterclaims change the dynamic of the dispute and create settlement leverage that did not exist before the funder sent the letters.

The UCC notice was designed to pressure you. An attorney's response is designed to redirect that pressure. The consultation is the first step, and it should happen today.