UCC Cash Proceeds Language - Required for Equipment Financing?
Having some confusion about cash proceeds ucc language in our UCC-1 filings. We're financing restaurant equipment and our collateral description currently reads 'All equipment, furniture, and fixtures now owned or hereafter acquired.' Our legal counsel is saying we need to add specific cash proceeds ucc language but the SBA lender is pushing back saying it's not necessary for equipment-only deals. The equipment is worth about $180K and we're concerned about gaps in our security interest if the borrower sells any pieces. Anyone dealt with similar cash proceeds ucc issues on equipment financing? Is the language actually required or just recommended best practice?
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Carmen Lopez
You definitely want cash proceeds ucc coverage on equipment deals. Equipment gets sold all the time, especially in restaurants where they upgrade or replace broken items. Without proper proceeds language, you lose your security interest the moment equipment gets sold. The basic rule is that your security interest continues in identifiable proceeds, but you need to perfect it properly.
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Andre Dupont
•This is exactly right. I've seen too many lenders get burned when borrowers sold equipment and the cash disappeared. The UCC-1 should include something like 'and all proceeds thereof' at minimum.
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QuantumQuasar
•But doesn't the UCC automatically give you rights to proceeds even without specific language? I thought that was built into Article 9.
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Carmen Lopez
•Yes, you get proceeds rights automatically under 9-315, but perfection is a different issue. For cash proceeds, you're only automatically perfected for 20 days. After that you need to file or meet other perfection requirements.
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Zoe Papanikolaou
Had this exact issue last month with a manufacturing client. The equipment financing deal almost fell through because of cash proceeds ucc language disputes between counsel and lender. What saved us was using Certana.ai's document verification tool - we uploaded both the loan agreement and our draft UCC-1 and it immediately flagged the inconsistency between the security agreement's proceeds language and our filing description. Tool showed us exactly how to align the documents properly.
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Jamal Wilson
•Never heard of Certana.ai but that sounds really useful. We constantly have issues with mismatched language between loan docs and UCC filings.
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Mei Lin
•Wait, so Certana actually checks if your UCC matches your security agreement? That would save so much back-and-forth with counsel.
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Zoe Papanikolaou
•Yeah exactly - you just upload PDFs and it cross-references everything. Catches debtor name mismatches, collateral description gaps, all that stuff that usually takes hours to review manually.
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Liam Fitzgerald
The SBA lender is wrong here. Equipment deals absolutely need cash proceeds ucc language, especially in restaurant situations. Restaurants go through equipment constantly - selling old fryers, upgrading POS systems, replacing worn out furniture. Your collateral description should read something like 'All equipment, furniture, fixtures, and inventory now owned or hereafter acquired, and all proceeds and products thereof.' That covers you for both cash and non-cash proceeds.
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Amara Nnamani
•This is the correct answer. Don't let the lender talk you out of proper proceeds coverage just because they want to close faster.
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Giovanni Mancini
•Should we also add 'accounts' to that description in case they sell equipment on credit terms?
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Liam Fitzgerald
•Good point. If there's any chance of credit sales, adding accounts receivable coverage makes sense. Just make sure your security agreement covers it too.
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NebulaNinja
ugh this cash proceeds ucc stuff is so confusing!! we filed our UCC-1 three months ago for equipment financing and now our attorney is saying we need to file an amendment to add proceeds language. is that even possible or do we need to start over with a new filing? the original UCC-1 just says 'restaurant equipment' which seemed fine at the time but now everyone's freaking out about it...
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Fatima Al-Suwaidi
•You can definitely amend with a UCC-3. Just file an amendment adding the proceeds language to your collateral description. No need to start over.
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Dylan Mitchell
•But make sure you do it soon. The longer you wait, the more risk you have if the borrower sells equipment in the meantime.
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Sofia Morales
•Actually had this same panic moment last year. Filed the amendment and everything worked out fine. Your original filing date still controls for priority purposes.
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Dmitry Popov
I'm seeing more and more SBA lenders trying to cut corners on UCC filings to speed up closings. It's crazy because proper cash proceeds ucc coverage is basic secured transactions 101. The automatic perfection only lasts 20 days under 9-315(d), then you need to have filed or meet the continuous perfection requirements. Restaurant equipment is especially risky because it gets sold frequently.
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Ava Garcia
•Totally agree. The rush to close is creating all sorts of problems down the road when borrowers default and lenders realize their security interests aren't properly perfected.
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StarSailor}
•Is there a standard form of proceeds language that most people use? Every law firm seems to have their own version and it gets confusing.
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Dmitry Popov
•Most common version is 'and all proceeds, products, offspring, rents, and profits thereof' but it varies by jurisdiction and deal type. Key is making sure it's broad enough to cover what you need.
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Miguel Silva
Just went through this exact situation with a $200K equipment deal. The lender initially said cash proceeds ucc language wasn't needed but changed their tune after their compliance review. We ended up using Certana.ai to verify our final UCC-1 language matched all the loan documents - definitely worth it to avoid any gaps in coverage.
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Zainab Ismail
•How does Certana.ai work exactly? Do you just upload your docs and it tells you what's wrong?
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Miguel Silva
•Pretty much - you upload your loan agreement, security agreement, UCC-1, whatever docs you have and it checks for consistency across all of them. Caught several issues we would have missed.
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Connor O'Neill
•That sounds really helpful for complex deals with multiple documents. We usually just eyeball everything which probably isn't the best approach.
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Yara Nassar
Your counsel is absolutely right. Equipment financing without proper cash proceeds ucc coverage is asking for trouble. I've been doing secured transactions for 15 years and restaurant deals are particularly risky because of how often equipment changes hands. The SBA lender probably just wants to close quickly but that's not your problem - your job is to protect the client's security interest properly.
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Keisha Robinson
•This is why I always push back when lenders try to rush UCC filings. Better to take an extra day and get it right than deal with problems later.
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GalaxyGuardian
•What happens if you don't have proceeds language and the borrower sells equipment? Do you lose your security interest completely?
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Yara Nassar
•You get automatic perfection in proceeds for 20 days under 9-315(d). After that, if you haven't properly perfected in the proceeds, you can lose your security interest depending on the circumstances.
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Paolo Ricci
Had similar pushback from an SBA lender last month on cash proceeds ucc language. They claimed it would slow down their underwriting process. Ended up compromising with basic proceeds language instead of the more detailed version counsel wanted. Deal closed on time and everyone was happy. Sometimes you have to pick your battles.
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Amina Toure
•What was the basic language you used? Always looking for compromise solutions that keep deals moving.
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Paolo Ricci
•Just added 'and all proceeds thereof' to the end of the collateral description. Simple but covers the main concern about cash proceeds from equipment sales.
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Oliver Zimmermann
•That's probably sufficient for most equipment deals. The key is having something rather than nothing.
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Natasha Volkova
The whole cash proceeds ucc perfection thing is one of the most misunderstood areas of secured transactions. Lenders think they're automatically covered but don't realize the 20-day limitation. Equipment financing is especially tricky because restaurants constantly buy and sell equipment. Your description should definitely include comprehensive proceeds language.
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Javier Torres
•Is the 20-day rule the same in all states or does it vary? We do deals across multiple jurisdictions and it gets confusing.
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Natasha Volkova
•The 20-day rule under 9-315(d) is uniform across all UCC states. But there can be variations in how different states handle specific types of proceeds or filing requirements.
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Emma Davis
•This is why I always include standard proceeds language regardless of what the lender says. Better safe than sorry when it comes to perfection issues.
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CosmicCaptain
Bottom line - include the cash proceeds ucc language. Your counsel is giving you good advice and the SBA lender is prioritizing speed over proper security interest perfection. Restaurant equipment gets sold all the time and without proceeds coverage you're taking unnecessary risk. Standard language like 'and all proceeds and products thereof' should be sufficient and won't slow down the deal significantly.
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Malik Johnson
•Agreed. It's such basic language that any experienced lender should be fine with it. If they're pushing back this hard it makes me wonder what other corners they're trying to cut.
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Isabella Ferreira
•Sometimes lenders get set in their ways with template forms and resist any changes even when they're clearly necessary. Stand your ground on this one.
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