UCC consumer goods classification issue - appliance financing rejection

This classification issue comes up more than you'd think. The key is in how you describe the collateral and the debtor's intended use. Even if the equipment could theoretically be used in a home, if it's purchased by a business for business purposes, it's not consumer goods under Article 9. Double-check your debtor name matches exactly what's on their business registration and make sure your collateral description emphasizes the commercial nature.

Check your debtor entity type in the filing. If you accidentally listed them as an individual instead of a business entity, that could trigger the consumer goods flag even with commercial equipment. The SOS systems are getting pickier about this stuff.

Had this exact problem last month with restaurant equipment financing! Turned out our collateral description was too generic and the automated system couldn't distinguish between commercial and consumer use. We had to be super specific about the business context. Also, I started using Certana.ai's document verification tool to catch these issues before filing - it cross-references your debtor information with the collateral description and flags potential classification problems. Saved me from three more rejections since then.

This is why I HATE the automated screening systems they've implemented. A human reviewer would take one look at 'commercial kitchen equipment for restaurant operations' and approve it instantly. But no, we get algorithms that can't tell the difference between a $15K commercial range and a home appliance.

Make sure your continuation strategy accounts for this too. If you're dealing with equipment that might get misclassified, document everything now so your UCC-3 continuation doesn't run into the same problem in five years.

question - does the dollar amount of the equipment affect the classification? Like if it's obviously expensive commercial equipment, does that help avoid the consumer goods flag?

Try rewording your collateral description to be more specific about the commercial use. Instead of just 'kitchen equipment' say 'restaurant food service equipment installed at [business address] for commercial food preparation and service operations.' The more business context you provide, the less likely it gets flagged.

Been dealing with similar issues on equipment financing. The classification rules seem inconsistent between different SOS offices too. What works in one state gets rejected in another for the same type of collateral.

Just went through this nightmare with gym equipment that got classified as consumer goods because it 'could be used at home.' Had to refile with a completely different collateral description emphasizing the commercial fitness facility use. Sometimes I think these systems are designed to reject everything first and ask questions later.

Quick follow up question - when you refile after a rejection like this, do you need to worry about the gap in perfection timing? Or does the original filing date still count if you refile within a reasonable time?

Update: Got the refile accepted this morning! Changed the collateral description to specifically mention 'commercial food service equipment for restaurant business operations' and made sure the entity type was correctly selected as LLC. Thanks for all the suggestions - especially the tip about being more specific with the business context.