When a lender makes a loan to your business, and in the loan agreement takes a security interest (as collateral) in one or more of your assets, it may include a completed UCC-1 financing statement (UCC-1). A UCC-1 is a document that, when properly filed with the state (often the secretary of state’s office), provides notice to potential buyers of those assets, and notice to future creditors of your business that the earlier lender has a priority interest in those assets. Article 9 of the Uniform Commercial Code governs business or commercial transactions (loans, extensions of credit) that are secured by collateral, and provides for use of the UCC-1 filing. Vehicles, office equipment and fixtures, inventory, investment securities, accounts receivable, machinery, letters of credit, and other moveable, tangible items of value often serve as the collateral for a UCC-1.

In Texas, when a lender extends a loan to a business and secures the loan with the business's assets, the lender typically files a UCC-1 financing statement. This filing is made with the Texas Secretary of State's office and serves as a public notice that the lender has a security interest in the specified assets of the business. The UCC-1 filing is governed by Article 9 of the Uniform Commercial Code (UCC), which regulates secured transactions involving personal property. The types of assets that can be used as collateral and are subject to a UCC-1 filing include vehicles, office equipment, inventory, investment securities, accounts receivable, machinery, and letters of credit, among others. The filing of a UCC-1 financing statement is crucial as it establishes the lender's priority over the assets in question, which is particularly important in the event of default or bankruptcy of the business. It alerts potential buyers and future creditors that the lender has a legal claim to the collateral, which can affect the business's ability to sell the assets or obtain additional financing.