Month: October 2018
Liens: Understanding Them and How They Can Affect Your Business
What is a UCC lien?
A lien is a legal claim by a lender against a business asset that is used to secure a loan. It’s essentially an official notification by a lender that the business owes them money, and that if the business doesn’t pay it back, the lender claims the right to other business assets.
A UCC lien, or UCC filing, is a notice that a lender has a security interest in one or more of your assets. The term comes from a collection of established rules that govern how commercial transactions work in the United States, called the Uniform Commercial Code (UCC). UCC liens can be filed against businesses or individuals.
When your business enters into a financing agreement that is secured by collateral, a UCC lien could be filed against any assets you pledged to secure the loan. A UCC lien does not generally hurt your business’s day-to-day operations, but could prevent you from getting additional funding before satisfying the lien.
While other types of liens typically get filed because of something bad happening, such as not paying your taxes, a UCC lien is a normal part of small business financing. The lien serves as notice to all potential creditors that you owe a lender money and that your assets are pledged to that lender until you repay the debt.
Why liens matter to your business?
Imagine two people ask to borrow money. You find out that one person has three other loans, and has already promised to pay them back before they pay you back. Who will you lend to?
Financing providers operate in the same way. All else being equal, the fewer liens that are already on your business, the larger a credit line they will be willing to extend to your business. Unfortunately, however, not all lenders release their liens as soon as you pay off the corresponding debt, and this can cause problems when other financial providers evaluate your business.
How to find liens on your business
Want to do a quick health check on your liens? First, you need to know what state your business is incorporated in. Most likely this is your headquarters state (particularly if you are a sole proprietor), though for tax reasons some businesses incorporate in a different state.
Next, if you are incorporated in one of the 14 following states, you’re in luck: your lien search will be free. The 14 states with free searches are Alaska, Arizona, Colorado, Florida, Iowa, Kentucky, Massachusetts, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Rhode Island.
If your state doesn’t show up in that list, you can still do a search for a small fee through the Secretary of State.
How to remove liens
The first step to legally removing a UCC lien is to pay off the debt. The rules for releasing a UCC lien after the debt is paid vary by state, but there are 2 main ways to remove them:
- The Lender Files a UCC-3 Financing Statement Amendment
- You Can Swear an Oath of Full Payment at Your State’s SOS Office
Liens will still show up in a UCC search for up to five years after they are removed, but the search will show that the lien has been satisfied. They will not be removed from the database, but the database will show that you met your obligations to the lender and they no longer have any rights to your assets.
- Lender Files a UCC-3
You can request that your lender files a UCC-3 financing statement amendment. This will remove the UCC lien. Lenders are not required to file this, and most will not do this automatically. UCC liens expire automatically after 5 years (but can be renewed by the lender on longer term loans). Since they automatically expire, most lenders do not bother filing releases unless a borrower requests they do so.
How to remove liens (cont’d)
You can also request removal of a UCC lien with your final payment, or any time after you have paid off your loan. When the lender receives your release request then they should start the process of filing the UCC-3 and give you confirmation of any filing.
If your lien search reveals obsolete liens that are tied to financing you have already repaid, you should contact the lender (the “secured party” in lien terms) and notify them that you want the lien removed, which they are required to do if they don’t have ongoing claims.
- Swear an Oath of Full Payment
You can go down to your state’s SOS office and swear an oath that the debt has been paid in full. You can do this at any time, and the lien will be removed the same as it would if your lender filed the UCC-3. Lying about these UCC liens can result in certain penalties that can include fines or jail time.
Conclusion
UCC liens are not something you generally should be worried about or surprised by. The only potential drawback to having a UCC filing is not being able to get additional funding using your assets as collateral. Every time you enter into a financing agreement you should be aware that a UCC lien may be filed against your business’s assets.
If your business currently has a UCC filing against it from a traditional long term lender, and you are struggling to find additional financing, then you should consider a loan with Fresh Funding. Divergent cares more about your business’s revenues than they do about collateral. We can fund up to $500,000 as quick as 1 business day. Apply today, free of charge, to see how much you qualify for.
5 Ways To Make A Smooth Transition From A Traditional Brick-And- Mortar To An Online Store!
If you are one of those businessmen, who believe that online stores will never really catch up to the shopping experience provided by traditional brick-and-mortars… You are in for a rude awakening!
Online sales are projected to reach nearly $500 billion by the end of 2018!
You don’t really have to bid goodbye to your brick-and-mortar store, though… You can simply embrace e-commerce, and set up your shop online. This allows you to be available 24/7, be visible to wider audiences, and have a lot more sales opportunities!
And, it’s not that difficult really… here are a few simple ways to ensure that your move to an online presence is free of hurdles!
1. Choose the right online platform:
Based on what you are selling, and who you are selling to, you first have to choose the right online platform. This could either be an e-commerce site of your own, online marketplaces like Amazon or Ebay, or social networks like Facebook or Instagram.
While each of them have their own sets of pros and cons, the choice would depend on your own requirements. You could also try using multiple platforms, before settling with the one that most suits your unique needs.
2. Design an attractive online store:
While designing an online store, make sure it reflects your brick-and-mortar store — customers should find a certain familiarity while shopping online.
If you have a seller’s profile on an online marketplace, there may not be much scope for customization, except in the case of a few like Amazon or Ebay. Social networks, too, have limited tools for sellers to customize their stores.
3. Build Effective Product Pages:
Online stores work very differently from brick-and-mortar stores. Online customers rely on product images, descriptions and reviews to make the purchasing decision. Make sure you use appropriate titles, descriptions, keywords, and images on the product pages.
Online marketplaces always have a provision for customers to provide reviews. On social networks, you can always ask customers to leave comments on your pictures and posts, and also review your services.
4. Make It Work — Online And Offline:
If you have your own e-commerce store, you could have a ‘buy-online and pickup-offline’ program that allows customers to make purchases on your site, and then swing by to collect them from your physical store. It saves them the time and money spent on shipping!
5. Keep Making Improvements:
Once you’ve moved your store online, make sure it performs well. Some metrics you can use to evaluate this are sales, conversion rate, where your visitors are coming from, the kind of products that are selling and those that aren’t, and cart abandonment rates,
Now that you know how to make the transition from a brick-and-mortar business to an online one, you will need funding to actually go about it.
Getting traditional small business bank loans is rather hard — especially if you have a bad credit history or an unfavorable credit score. Here are some alternatives you can choose from:
- SBA Loans: The Small Business Administration offers three loans programs to help small business owners to meet their funding needs.
- Online Lenders: If you are looking for funds to cover your marketing costs, you could always check with an online lender. However, these lenders offer loans only to businesses which have been active for a certain number of years, therefore making them unavailable for startups.
- Business Credit Cards: These cards are a lot like personal credit cards — you’ll get a credit limit, which is great when you aren’t really sure how much money you’re going to need.
- Personal Loans: You could always take a personal loan to meet urgent funding needs, especially if you have a good personal credit score and a favorable history.
- Investors: If you have a business with the potential to rake in high revenues, you can always get investors and venture firms to invest in your startup. However, you need to have an extremely scalable business model.
Of course, you could always opt for the less traditional loans, like the ones offered by Fresh Funding. We offer business cash advances, working capital loans, and business expansion loans to small businesses.
What’s more — your application (if you are eligible) can be approved in minutes, with funding disbursed on the same day!
To know more, get in touch with us today!
