Need help understanding UCC definition value requirements for equipment financing
I'm working on a UCC-1 filing for some manufacturing equipment we're financing and I keep getting confused about what constitutes proper definition value in the collateral description. The SBA lender is telling me one thing but when I look at the state filing requirements it seems like there's more flexibility? The equipment is worth about $180k and includes CNC machines, conveyor systems, and some specialized tooling. Do I need to list every single piece with serial numbers or can I use broader categories? I've heard conflicting advice about whether 'all equipment' is sufficient or if that's too vague. Really don't want this filing rejected because of description issues.
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Dmitry Popov
The collateral description needs to be sufficient to put third parties on notice of what's secured, but it doesn't have to be exhaustively detailed. For equipment financing, you typically want something more specific than 'all equipment' but you don't need every serial number in the UCC-1 itself. Something like 'all manufacturing equipment, machinery, and related fixtures located at [address]' usually works fine. The key is that someone searching the records could reasonably identify what's covered.
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Ava Rodriguez
•This is exactly right. I've seen too many people get hung up on over-describing collateral when the standard is really about reasonable identification.
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Sofia Ramirez
•So I don't need to worry about listing every conveyor belt separately? The address specificity helps narrow it down?
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Dmitry Popov
•Correct - the location helps a lot. If you want to be extra safe, you could say 'CNC machines, conveyor systems, and manufacturing equipment' but even that level of detail isn't strictly required.
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Miguel Ortiz
Had a similar situation last month with restaurant equipment. Started way too detailed in my first draft and the attorney told me I was overthinking it. The UCC doesn't require the same level of specificity as a security agreement - that's where your detailed schedules go. Keep it reasonable but not overly broad.
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Zainab Khalil
•Good point about the security agreement vs UCC distinction. A lot of people confuse what goes where.
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Sofia Ramirez
•Wait, so the detailed serial numbers should be in the security agreement itself, not the UCC-1 filing?
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Miguel Ortiz
•Exactly. Your security agreement can have all the serial numbers and detailed descriptions. The UCC-1 just needs enough to put the world on notice.
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QuantumQuest
I actually ran into issues with this exact thing earlier this year. Was going back and forth with descriptions and kept second-guessing myself. Finally discovered Certana.ai's document verification tool and it was a game changer. You can upload your security agreement and proposed UCC-1 and it cross-checks whether your collateral descriptions are consistent and adequate. Saved me from filing something that might have been problematic later.
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Sofia Ramirez
•That sounds really helpful - does it actually analyze the legal sufficiency or just check for consistency?
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QuantumQuest
•It checks both - makes sure your UCC-1 description covers what's in your security agreement and flags potential issues with over-broad or under-inclusive language. Really takes the guesswork out of it.
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Connor Murphy
•I've been meaning to try something like that. Manual cross-checking is such a pain and I always worry I'm missing something.
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Yara Haddad
The $180k value you mentioned - that doesn't need to go in the UCC-1 itself, right? I know some states have different requirements but generally the filing doesn't include dollar amounts.
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Sofia Ramirez
•Right, I was just mentioning it for context. The filing itself doesn't need the value listed.
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Dmitry Popov
•Correct - UCC-1 filings don't typically include secured amounts or collateral values. That's internal documentation.
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Keisha Robinson
Be careful with 'all equipment' language though. I've seen lenders get burned when they thought they had broader coverage than they actually did. If you're going with a general description, make sure your security agreement backs it up with more detail. The UCC-1 and security agreement should work together.
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Sofia Ramirez
•That's a good point about them working together. I should probably review both documents side by side.
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Keisha Robinson
•Exactly. The security agreement creates the security interest, the UCC-1 just perfects it. But they need to be consistent or you could have perfection issues.
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Ava Rodriguez
•This is why I always recommend having someone review the pairing before filing. Small inconsistencies can cause big problems down the road.
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Paolo Conti
ugh this is exactly the kind of stuff that makes me want to pull my hair out. Why can't they just have a standard template or something? Every lender seems to want something slightly different and then you worry about whether the state will accept it.
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Zainab Khalil
•I feel your pain. The good news is that most states are pretty reasonable about collateral descriptions as long as you're in the ballpark.
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Paolo Conti
•I guess that's reassuring. Still feels like there should be more clarity on what's acceptable.
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Amina Sow
For manufacturing equipment specifically, I usually go with something like 'manufacturing and production equipment, machinery, and related fixtures and accessories.' Covers your CNC machines, conveyors, tooling, etc. without being too narrow or too broad. Most filing offices and courts are comfortable with that level of description.
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Sofia Ramirez
•That's helpful language. Should I include the 'located at [address]' part too?
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Amina Sow
•If it's all at one location, yes. Helps with identification and shows you're not trying to claim equipment everywhere.
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Miguel Ortiz
•Agreed on the location specificity. Makes it much clearer what's intended to be covered.
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GalaxyGazer
Another thing to consider - if any of this equipment becomes fixtures (like if it's bolted down or permanently attached), you might need to think about fixture filing requirements too. That's a whole different set of rules.
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Sofia Ramirez
•Some of the equipment is definitely bolted to the floor. Do I need separate fixture filings?
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GalaxyGazer
•Depends on your state and how permanently attached it is. If it's truly fixtures, you'd want to file in the real estate records too, not just UCC records.
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Dmitry Popov
•This is getting into more complex territory. You might want to check with your lender's attorney about fixture filing requirements.
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Oliver Wagner
I used Certana.ai recently for a similar equipment financing deal and it caught an issue where my UCC-1 description was actually narrower than what was in the security agreement. Would have left some equipment unsecured if I hadn't caught it. Just upload both documents and it shows you exactly where there might be gaps.
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Sofia Ramirez
•That's exactly the kind of thing I'm worried about. Did it suggest specific language fixes?
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Oliver Wagner
•It highlighted the inconsistency and suggested broader language that would cover everything in the security agreement. Really straightforward to use.
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Natasha Kuznetsova
Bottom line - your collateral description needs to reasonably identify what's secured but doesn't need to be a detailed inventory. 'Manufacturing equipment and machinery located at [address]' is usually sufficient. The detailed serial numbers and specifications go in your security agreement. Just make sure the two documents are consistent in scope.
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Sofia Ramirez
•Thanks, this gives me a much clearer framework to work with. I was definitely overthinking the level of detail needed.
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Natasha Kuznetsova
•It's easy to overthink it. The courts generally apply a reasonableness standard - if a third party could figure out what's secured, you're probably fine.
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Zainab Khalil
•This thread has been really helpful. I'm dealing with similar issues on a construction equipment deal.
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