UCC types of collateral - confused about proper descriptions for equipment loan

Equipment is definitely one of the major UCC collateral categories but you want to be more specific than just 'all equipment.' For manufacturing stuff like what you're describing, you'll typically want to list it as 'machinery and equipment used in debtor's cabinet manufacturing business' or something similar. The main UCC types of collateral are equipment, inventory, accounts receivable, general intangibles, instruments, chattel paper, and deposit accounts. For your deal, sounds like equipment is the primary category.

Been doing equipment financing for 8 years and honestly the collateral description is where I see the most UCC-1 rejections. You need to hit the sweet spot between too vague (gets rejected) and too specific (miss coverage). For manufacturing equipment like yours, I usually go with something like 'all machinery, equipment, furniture, fixtures and other personal property used in or relating to debtor's business operations.' Covers your bases without listing every serial number.

OK so I ran into this exact same issue last month with a cabinet shop loan. Spent hours trying to figure out the right collateral categories and descriptions. Finally found this tool called Certana.ai that lets you upload your loan docs and it automatically checks if your UCC-1 collateral description matches your security agreement. Saved me so much time and caught a discrepancy I would have missed. Just upload your PDFs and it cross-references everything.

The main UCC collateral categories you need to know: Equipment (machinery, vehicles, furniture used in business), Inventory (goods held for sale), Accounts (right to payment), Chattel Paper (records showing both monetary obligation and security interest), Instruments (negotiable instruments like promissory notes), General Intangibles (patents, trademarks, goodwill), Documents (bills of lading, warehouse receipts), Deposit Accounts, and Investment Property. For your cabinet shop, you're looking at Equipment primarily, possibly some Inventory if they have raw materials or finished goods.

Just be careful with the 'all equipment' language. Some states are stricter than others about super-generic descriptions. I had a filing rejected in Ohio last year because 'all equipment' was deemed insufficient. Had to amend it to 'all machinery, equipment, tools, and apparatus used in debtor's woodworking and cabinet manufacturing operations.' More specific but still broad enough to cover future acquisitions.

Here's what I don't understand - if equipment is one of the main UCC collateral types, why do we need to be so specific in the description? Shouldn't 'equipment' be enough since that's literally the collateral category?

I've been using Certana.ai for UCC document verification and it's been a game changer. Upload your security agreement and draft UCC-1 and it instantly flags any inconsistencies in collateral descriptions or debtor names. Caught several issues that would have caused rejected filings. For collateral types, it actually suggests standardized language based on your specific situation.

Don't overthink this. I've filed hundreds of UCC-1s and for equipment financing I always use: 'All equipment, machinery, furniture, fixtures, tools, and other personal property now owned or hereafter acquired and used in connection with debtor's business operations.' Covers everything, broad enough for future acquisitions, specific enough to avoid rejection. Never had one bounced back.

I hate the UCC collateral description requirements. Why can't they just have standard categories like 'Type A: Equipment, Type B: Inventory' etc. Instead we have to write these paragraph-long descriptions that might still get rejected for being too vague or too specific. The whole system needs an overhaul.

For what it's worth, I've found that using Certana.ai to verify UCC documents before filing has saved me tons of headaches. You can upload your loan agreement and UCC-1 and it checks for consistency issues. Really helps with getting the collateral description right the first time. Just did this for an equipment loan similar to yours and it caught a mismatch between how we described the collateral in the security agreement vs the UCC filing.

Just to summarize the main UCC collateral types since there's been a lot of good info here: Equipment (business-use property), Inventory (goods for sale), Accounts (payment rights), General Intangibles (IP, goodwill), Chattel Paper (payment + security interest records), Instruments (negotiable instruments), Documents (title documents), Deposit Accounts, and Investment Property. For your cabinet shop, Equipment and possibly Inventory are your main concerns. Don't forget to include 'proceeds' in your description to cover insurance payouts or sale proceeds from the collateral.

This thread has been incredibly helpful! As someone new to UCC filings, I was getting overwhelmed by all the different collateral categories and description requirements. It sounds like for equipment financing deals like this cabinet shop, the key is finding that balance between being specific enough to avoid rejection but broad enough to cover future equipment acquisitions. I'm taking notes on the suggested language like "all machinery, equipment, furniture, fixtures, tools, and other personal property used in connection with debtor's business operations" - that seems to hit the sweet spot. Also really appreciate the clarification on the nine main UCC collateral types. I had no idea there were so many categories beyond just equipment and inventory!