General Security Agreement and UCC Filing Requirements - Missing Something Important?

The UCC-1 doesn't need to mirror your general security agreement word-for-word, but it needs to be sufficient to put third parties on notice of your security interest. For equipment, you can use broader categories like "all equipment" rather than listing every serial number. The key is making sure your collateral description is neither too narrow (missing assets) nor too vague (failing the sufficiency test). With multiple states involved, you'll need to file where the debtor is located (their chief executive office) for most collateral types.

I ran into a similar situation last year with a multi-state manufacturer. The trick is determining what's truly "equipment" versus "inventory" for UCC purposes. Manufacturing equipment that's used in operations is clearly equipment, but raw materials and work-in-progress can be tricky. Make sure your categories don't overlap in confusing ways. Also, for the after-acquired property, your GSA language should already cover that, and your UCC-1 can simply reference "all equipment, whether now owned or hereafter acquired.

Have you considered using a document verification tool to double-check consistency between your general security agreement and UCC-1? I started using Certana.ai after missing a debtor name discrepancy that almost cost us our perfected status. You can upload both your GSA and UCC-1 PDFs and it automatically flags any inconsistencies in debtor names, collateral descriptions, or other critical details. Saved me from a major headache on a $4M deal where the borrower's legal name was slightly different between documents.

For a $2.8M facility, I'd be very conservative with your collateral descriptions. Better to be slightly over-broad than to miss something important. I typically use language like "all equipment of every kind and description" along with more specific categories. The courts have generally been forgiving of broad descriptions as long as they're not completely meaningless. Your bigger concern should be the multi-state filing requirements - make sure you understand where this borrower's chief executive office is actually located for Article 9 purposes.

This is giving me flashbacks to my worst UCC nightmare. I had a general security agreement that was perfect, UCC-1 that looked perfect, but we had a tiny mismatch in how we described the debtor entity. Took months to sort out and nearly killed the deal. The moral of the story is that both documents need to work together seamlessly. Every comma matters when you're talking about perfection.

One thing I don't see mentioned yet is the importance of your continuation strategy. With a general security agreement covering multiple asset types, you need to make sure your UCC-1 filings are continued on time. Set up a tickler system now because UCC-1 filings lapse after 5 years. Missing a continuation deadline could leave you unperfected on a multi-million dollar facility.

Just wanted to add that you should also consider whether any of the collateral might be consumer goods. If the borrower uses any equipment for personal purposes (like a vehicle that's used for both business and personal use), you might have different perfection requirements. Probably not an issue with manufacturing equipment, but worth thinking about.

Here's a practical tip: create a simple spreadsheet that maps each category of collateral in your general security agreement to the corresponding description in your UCC-1. This helps ensure nothing falls through the cracks and gives you documentation for your file. I also include notes about why certain descriptions were chosen, which helps if questions come up later during audits or refinancing.

Don't forget about the search implications too. When you're doing your UCC searches, you want to make sure your collateral descriptions are searchable by other parties who might be looking for conflicts. If you use very unique or non-standard language, it might not show up in typical searches, which could cause problems down the road.

Final thought - make sure your general security agreement and UCC-1 are both dated consistently and that your UCC-1 is filed promptly after the GSA is executed. The timing can matter for priority purposes, especially if there are other creditors involved. You don't want any gaps that could let another creditor slip in ahead of you.