Secured loan needs promissory note AND security agreement - UCC filing confusion

This explanation helps a lot. So the security agreement is what actually gives them rights to the collateral if I default?

Exactly. Without the security agreement, they'd just be an unsecured creditor even with the promissory note.

Good point about matching descriptions. Should I list each machine individually or can I use a general description like 'manufacturing equipment'?

For high-value equipment like yours, I'd go with specific descriptions including make, model, and serial numbers. Generic descriptions can cause problems during audits.

We had a loan almost get called because our UCC-1 said 'office equipment' but the security agreement listed specific computers and printers. Lender freaked out during their annual UCC review.

That sounds helpful. Did it catch any issues with your documents?

Yes! It found that our security agreement had our legal business name but the UCC-1 draft had our DBA name. Would have been rejected by the SOS office.

Name mismatches are the #1 cause of UCC filing rejections. Always use the exact legal name from your articles of incorporation.

It's actually for your protection too. The UCC filing gives public notice of the lien, which prevents other creditors from claiming superior rights to your equipment.

I guess that makes sense. Still feels like unnecessary paperwork though.

Even my tractor loan had all three documents. Thought it was overkill for a $45K piece of equipment but apparently that's just how it works.

Lenders don't take chances with perfection. An unperfected security interest is almost worthless if you file bankruptcy.

This is why I always recommend getting legal review for any secured financing over $100K. Too many ways to mess up the documentation.

We do plan to expand our equipment next year. Should that clause be in the UCC-1 too?

The UCC-1 collateral description should cover after-acquired property if that's what the security agreement says. Keep them consistent.

How strict are they about addresses? Our business address changed last month.

Use your current legal address on all documents. If the address in your articles of incorporation is outdated, update that first or you might have debtor name issues.

Address changes can be tricky. I'd verify with the Secretary of State what address they have on file for your entity before finalizing anything.

Thanks for confirming. I feel better about moving forward with all three documents now.

Just double-check everything before signing. These documents will be in place for the full loan term.

Does it work for continuation filings too? I have several coming up next year.

Yes, you can upload your original UCC-1 and the continuation form to verify they match. Really helpful for avoiding lapse situations.

Continuation deadlines are no joke. Miss the window and the lender loses their perfected status.

The lender is providing all the documents, but I should probably have them reviewed before signing.

Absolutely. Make sure the collateral description isn't overly broad and that you understand all the default provisions in the security agreement.

Good to know this is normal. I was worried the lender was being overly complicated.

Nope, they're just following standard secured transaction procedures. Better to do it right from the start than have problems later.

Exactly. I've seen lenders lose their security interest because they cut corners on documentation. This three-document approach is tried and true.