MCA Companies and UCC Liens: How to Get Them Removed

The MCA was paid off eight months ago. The lien is still on file. It is costing you money every day it remains — in denied loans, in higher rates, in lost opportunities the lien silently blocks.

When you entered the MCA agreement, the funder filed a UCC-1 financing statement against your business with the Secretary of State. That filing tells every lender, investor, credit agency, and potential partner who searches your business name that someone else has a claim on your assets. The filing is public. It appears in every UCC search, every credit report that pulls UCC data, and every due diligence review conducted by anyone considering a financial relationship with your business.

When the MCA is satisfied — when the full purchased amount has been repaid through daily withdrawals — the filing should be terminated by the funder through a UCC-3 termination statement. The termination tells the world that the claim no longer exists. In practice, many funders do not file the termination. The obligation ends. The public record does not.

Why the Lien Persists

Some funders delay UCC-3 termination filings because of administrative neglect. The person who handled your account moved on. The process for filing terminations is manual and no one prioritized it. The funder’s back office has a backlog of terminations and yours has not reached the front of the queue.

Some funders delay because the active lien is strategically useful. An active UCC filing on your business makes it difficult to obtain financing from anyone else. If you cannot get financing elsewhere, you are more likely to return to the same funder for your next advance. The lien is a fence, and the funder is the only gate.

Some funders delay because they dispute that the obligation is fully satisfied. They claim a residual balance, a fee, a penalty, or an adjustment that keeps the account technically open and the lien technically justified. Whether the claim is legitimate requires a review of the agreement, the payment history, and the funder’s accounting.

The reason for the delay does not change the effect. Your business cannot obtain a loan. Your credit profile reflects an encumbrance that may not belong there. Every week the lien persists is another week of impaired financial capacity.

The Formal Demand

Under Article 9 of the Uniform Commercial Code, Section 9-513, a secured party is required to file or send a termination statement within twenty days after receiving an authenticated demand from the debtor, if there is no obligation remaining and no commitment to make future advances. The demand must be in writing. It must identify the financing statement by file number. It must state that the obligation has been fulfilled.

The demand should be sent by certified mail, return receipt requested, and by email if you have an email address for the funder. Keep a copy of everything. Note the date the demand was sent and the date the twenty-day period expires. If the funder does not comply within twenty days, you have created a documented record of the funder’s failure, which supports further legal action.

If the funder does not comply, some jurisdictions provide for statutory damages — a fixed penalty per day or per violation for failure to file a termination statement. All jurisdictions allow recovery of actual damages caused by the failure: the loan you were denied, the higher interest rate you paid on alternative financing, the business opportunity you lost because the lien made you unfundable.

When the MCA Is Not Satisfied

If you are still in the MCA agreement, or if the agreement is in dispute, the lien cannot be simply demanded away. The funder will argue that the obligation is outstanding and the lien is properly maintained. However, the lien can still be challenged.

If the filing was broader than the agreement authorized — if the UCC-1 covers asset classes that the MCA agreement does not mention as collateral — the filing exceeds the scope of the authorization and can be challenged on that basis.

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If the agreement itself is unenforceable — because it constitutes a usurious loan, because it was induced by fraud, or because it violates state consumer protection laws — the lien securing that agreement is built on a void foundation. A security interest in collateral that secures a void obligation has no legal basis.

If the filing contains errors — an incorrect debtor name, an incorrect filing jurisdiction, a lapsed continuation statement — the filing may be ineffective on its own terms.

An attorney can review the UCC filing against the underlying agreement, compare the scope of the filing to the scope of the authorization, evaluate the enforceability of the underlying agreement, identify procedural or substantive defects in the filing, and pursue the appropriate remedy. The remedy may be a demand letter, a court motion, a negotiated termination as part of a broader settlement, or a legal challenge that renders the lien moot by voiding the agreement it secures.