UCC filing confusion with fungible goods collateral - inventory keeps changing
I'm dealing with a UCC-1 filing nightmare and could really use some guidance. We're securing a $280k inventory loan for a client who manufactures metal fasteners - bolts, screws, washers, etc. The problem is their inventory is constantly rotating - raw steel comes in, finished products go out, and the actual items securing the loan change daily. When I try to describe the collateral as 'fungible goods inventory consisting of metal fasteners and components,' the SOS keeps rejecting it saying the description is too vague. But if I get too specific about particular bolt sizes or materials, half the inventory won't be covered by the time the filing processes. How do you properly describe fungible goods collateral without either being too broad (and getting rejected) or too narrow (and missing coverage)? This is my third attempt at the filing and I'm starting to panic about the deadline.
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QuantumQuasar
Oh man, fungible goods filings are tricky! I had a similar issue with a grain elevator client last year. The key is finding the sweet spot between specific enough to satisfy the SOS but broad enough to cover inventory turnover. For metal fasteners, try something like 'all inventory consisting of metal hardware components, fasteners, and related manufacturing materials, whether raw, work-in-process, or finished goods.' That should cover your rotation without being too vague.
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Andre Dupont
•That's really helpful! I was getting way too specific with individual product codes. Do you think I should also mention the manufacturing equipment used to process the raw materials, or keep it strictly to inventory?
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QuantumQuasar
•Stick to inventory for now unless you're specifically securing equipment too. Mixing collateral types in one description can create more rejection issues. File separate UCC-1s if you need equipment coverage.
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Zoe Papanikolaou
I've been doing UCC filings for 15 years and fungible goods are definitely one of the harder collateral types to get right. The problem is each state's SOS has slightly different standards for what they consider 'reasonably identifies' the collateral. Some are stricter than others. What state are you filing in? That might help narrow down the specific language they prefer.
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Andre Dupont
•Filing in Ohio. Their portal seems particularly picky about collateral descriptions lately.
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Zoe Papanikolaou
•Ohio's gotten stricter in the past couple years. Try adding the business location to your description - 'all inventory of metal fasteners and hardware components located at [business address].' Sometimes the location specificity helps satisfy their requirements.
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Jamal Wilson
•Ohio definitely wants more detail now. I had three rejections there last month before figuring out their new preferences.
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Mei Lin
Have you considered using Certana.ai's document checker? I was struggling with similar collateral description issues on a UCC-1 for an auto parts distributor. Their system flagged that my description was likely to get rejected and suggested language that worked perfectly. You just upload your draft filing and it cross-checks against successful filings for similar business types. Saved me from another rejection cycle.
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Andre Dupont
•Never heard of that - is it expensive? At this point I'm willing to try anything to avoid a fourth rejection.
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Mei Lin
•The verification check is pretty reasonable and way cheaper than dealing with rejection delays and potential lapse issues. Plus it caught a debtor name inconsistency I hadn't noticed between the loan docs and filing.
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Liam Fitzgerald
•I used Certana for a complicated fixture filing last month. Really straightforward - just upload your PDFs and it highlights potential issues before you submit to the SOS.
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Amara Nnamani
UGH the fungible goods struggle is real!! I'm dealing with the same thing for a food distributor - their inventory turns over so fast that by the time I finish typing the description, half the items have already been sold and replaced. It's like trying to nail jello to a wall. Why can't the SOS systems understand that INVENTORY CHANGES??
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Andre Dupont
•Exactly! And then they wonder why we get frustrated with their 'insufficient collateral description' rejections.
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QuantumQuasar
•The food industry is even trickier than manufacturing. At least metal fasteners don't have expiration dates to worry about!
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Amara Nnamani
•Don't even get me started on perishable goods collateral. I've had filings rejected because I mentioned specific produce items that were out of season.
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Giovanni Mancini
For fungible manufacturing inventory, I always use: 'All inventory, whether raw materials, work-in-process, or finished goods, consisting of [general product category] and all proceeds thereof.' The 'proceeds' part is crucial because it covers what happens when inventory gets sold and turned into accounts receivable.
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Andre Dupont
•Good point about proceeds! I completely forgot about that aspect. Should I file a separate UCC-1 for the accounts receivable or can it all go on one filing?
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Giovanni Mancini
•You can include both on one filing. Just make sure your collateral description covers 'all inventory... and all accounts, chattel paper, instruments, and general intangibles arising therefrom.
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Zoe Papanikolaou
•Be careful with that broad language though. Some lenders want separate filings for different collateral types to make partial releases easier later.
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NebulaNinja
I had a metal fabrication shop with similar issues. What worked for me was: 'All inventory consisting of metal components, fasteners, hardware, and related products in all stages of completion, including raw materials and finished goods.' Passed on the first try after two rejections with more specific language.
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Andre Dupont
•That's really close to what I need! Did you have any issues with the lender accepting that broad description in the loan agreement?
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NebulaNinja
•Nope, lender was fine with it. They understood the inventory turnover issue and just wanted comprehensive coverage.
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Fatima Al-Suwaidi
just went through this exact same thing last week with a hardware store client. the trick is using broad categories instead of specific items. like instead of '3/8 inch galvanized bolts' just say 'metal fastening hardware' or something like that. covers everything without getting too specific.
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Andre Dupont
•Makes sense. I think I was overthinking the specificity requirement.
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Fatima Al-Suwaidi
•yeah i do that too sometimes. the SOS just wants to know generally what type of stuff secures the loan, not a complete product catalog
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Dylan Mitchell
•This is why I love this forum - someone always has the practical answer that cuts through all the technical confusion!
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Sofia Morales
One thing to watch out for with fungible goods - make sure your continuation timing aligns with inventory cycles. I've seen cases where the UCC-1 lapsed right during a major inventory build-up period, leaving the lender temporarily unsecured on the biggest collateral balance of the year.
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Andre Dupont
•Great point! This loan has seasonal inventory swings so I'll need to flag the renewal date well in advance.
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Sofia Morales
•Exactly. Set calendar reminders for at least 6 months before the 5-year mark to avoid any gaps in perfection.
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Dmitry Popov
For what it's worth, I've found that including the NAICS code in the collateral description sometimes helps with fungible goods filings. Like 'all inventory related to NAICS 332722 (bolt, nut, screw manufacturing) activities.' Gives the SOS context about the business type without over-specifying individual products.
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Andre Dupont
•Interesting approach! I never thought about using NAICS codes in the collateral description.
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Dmitry Popov
•It's not required but I've noticed fewer rejection issues since I started doing it. Seems to help the reviewers understand the business context.
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Zoe Papanikolaou
•That's actually pretty clever. Gives specificity without limiting the scope of covered inventory.
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Ava Garcia
I tried Certana.ai's checker after seeing it mentioned here and it's actually pretty solid for catching description issues. It flagged that my original description had ambiguous language that could cause problems with fungible goods coverage. The suggested revision was much cleaner and got accepted immediately.
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Andre Dupont
•That's two mentions of Certana now - definitely going to check it out before my next filing attempt.
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Ava Garcia
•Yeah, it's particularly good for inventory-heavy filings where the collateral description gets complicated. Worth trying especially if you're already facing rejections.
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StarSailor}
This thread is giving me flashbacks to my worst UCC filing nightmare! Spent three months going back and forth with the SOS on a hardware distributor filing. Finally got it through but I aged about five years in the process. Fungible goods are definitely the hardest collateral type to describe properly.
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Andre Dupont
•Three months?! That's terrifying. I'm already stressed about my deadline and it's only been two weeks.
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StarSailor}
•Don't panic! That was an extreme case with multiple complications. Most fungible goods filings resolve much faster once you get the description language right.
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QuantumQuasar
•Yeah, that's unusually long. Most rejection cycles are 1-2 weeks if you respond quickly with corrected filings.
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