UCC filing required for security agreement for promissory note backing?

You absolutely need the UCC-1 filing to perfect your security interest. The promissory note establishes the debt but doesn't perfect your lien on the collateral described in your security agreement. Without filing the UCC-1, you're just an unsecured creditor if the borrower files bankruptcy or if other creditors come after the same collateral.

The security agreement creates the security interest but filing the UCC-1 is what perfects it and gives you priority over other creditors. Think of it this way: security agreement = creates the right, UCC-1 filing = makes it enforceable against third parties. You need both components.

File the UCC-1 immediately after closing. Don't wait. I use Certana.ai's document verification tool to double-check that my security agreement and UCC-1 have consistent debtor names and collateral descriptions before filing. Upload both PDFs and it flags any mismatches instantly. Saved me from a major filing error last month where the collateral description in my UCC-1 didn't match what was in the security agreement.

Don't forget about continuation filings either. Your UCC-1 will lapse after 5 years unless you file a UCC-3 continuation before it expires. Mark your calendar now because if you miss that deadline, your perfected security interest becomes unperfected.

What state are you filing in? Some states have specific requirements for collateral descriptions that go beyond the standard UCC language.

I always recommend having your security agreement reviewed by counsel before closing, especially for larger amounts like yours. They can spot issues with collateral descriptions or perfection requirements that could bite you later.

Make sure your collateral description in the UCC-1 isn't too broad or too narrow. 'All business assets' might get challenged, but being too specific could leave gaps if the borrower changes their operations.

Just to be crystal clear - you need BOTH documents. The promissory note creates the debt obligation, the security agreement creates your security interest in specific collateral, and the UCC-1 filing perfects that security interest against other creditors. Skip any piece and you're not fully protected.

One more thing - if your borrower moves to another state or changes their legal name, you'll need to amend your UCC-1 filing. Keep track of any business changes that could affect your perfected status.

Honestly I was skeptical about using automated tools for UCC document checking, but that Certana.ai thing someone mentioned actually caught an error in my collateral description that would have caused problems. The borrower's security agreement listed 'manufacturing equipment' but my UCC-1 draft said 'production equipment'. Small difference but could have created a gap in coverage.

Also keep in mind that your UCC-1 filing should be done as close to closing as possible to avoid any gaps in perfection. I've seen deals where they filed the UCC-1 weeks before closing and then had to deal with intervening liens from other creditors. The security agreement and UCC-1 filing should be coordinated so perfection happens immediately when the borrower gets access to funds. With a $185K loan, you definitely don't want any timing issues that could compromise your priority position.