What is a UCC?

A UCC, also known as uniform commercial code, is a financial document for businesses. When factoring, you list your factoring company as a creditor since you're technically borrowing money them. A UCC will never negatively affect your business or credit score.

A UCC refers to the Uniform Commercial Code, a series of laws first published in 1952 to standardize commercial transactions throughout the country. In terms of freight factoring, the term UCC  is used to describe a financing statement used between businesses who are lending and borrowing money.

This report states for the record that a creditor has an interest in a debtor’s property. In the event that a loan cannot be paid off under the terms of the agreement, the creditor then has an official statement that lists which assets have been identified as collateral. In factoring, the creditor is the factoring company and the debtor is the carrier.

What is a UCC Filing Used for in Factoring?

The most common application of the code is the UCC-1 document. This form is filed by a factoring company when it takes on a new client. It officially declares that the company has an interest in its debtor’s assets, essentially creating a lien. This does not mean a factoring company is going to immediately seize all your business assets. The UCC is really just put into place as a safety net for factoring companies in case a carrier goes bankrupt.

Filing a UCC is a standard part of any loan process and is completely normal. However, trucking companies that are unfamiliar with factoring may be surprised and confused at first when encountering this type of filing. A factoring company should always take a carrier's consent before filing a UCC on you, as removing a UCC can be expensive to the carrier.

Creditor vs Debtor

In the case of freight factoring, the creditor is the factoring company. The debtor is the carrier or trucking company. A debtor has to give creditors a stake in their business asset(s) because the debtor is technically borrowing money from the creditor. If a debtor owes a creditor money and fails to pay them back for any reason, such as going bankrupt, the factor can claim all or some of the carrier’s assets.

Types of UCCs

There are 2 types of UCCs relevant to the freight factoring industry.

1. Specific collateral: The factor has a stake in one or multiple of the carrier’s business assets, but not all of them. This filing is used for loans that pay for specific equipment, technology, or even a truck. If a carrier borrows money to buy a truck but fails to make payments, their factoring company can claim ownership of only that truck.

2. Blanket: A creditor with a blanket filing has a stake in all of the debtor’s business assets. This filing is more common when the debtor doesn’t have concrete assets when taking out a traditional business loan.

Effects on Your Business

Filing a UCC has absolutely no negative effect on your business, reputation, or credit score! The UCC will actually protect your business when you operate across state lines. Each state has its own laws that determine business transactions and protections, but the UCC will standardize the laws that apply to your business no matter what state you make those transactions in.


UCC filings are a normal part of the freight factoring process. They are not harmful to your business reputation or credit score in any way, and they can easily be canceled if you choose to switch between factoring companies or stop factoring altogether. Now that you know what a UCC filing is, you can go find the right factoring company for your trucking business.