What is a PMSI UCC filing and when do I need one
I keep hearing about PMSI UCC filings but honestly have no clue what they are or when I'm supposed to use them. My business is getting equipment financing for some new machinery and the lender mentioned something about a 'purchase money security interest' but didn't really explain it clearly. Are these different from regular UCC-1 filings? Do I need to file something special or does the lender handle it? I'm worried I'm missing some important step that could mess up my financing. Any help would be appreciated because I'm getting conflicting info from different sources.
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Rachel Clark
A PMSI is a Purchase Money Security Interest - basically it's when the lender provides financing specifically to purchase the collateral they're taking a security interest in. So if you're buying equipment and the lender is financing that exact equipment purchase, they get PMSI status. This gives them priority over other secured creditors who might have filed earlier.
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Chris King
•So it's not a different type of UCC filing? It's just regular UCC-1 but with special priority rules?
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Rachel Clark
•Exactly! Same UCC-1 form, but the lender checks a box indicating it's a PMSI. The magic is in the timing and the specific purchase-money nature of the transaction.
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Zachary Hughes
The key with PMSI is timing - the lender has to file the UCC-1 within 20 days after you receive the equipment to maintain their super-priority status. Miss that window and they lose the special priority benefits even though the security interest is still valid.
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Mia Alvarez
•Wait, is it 20 days everywhere? I thought some states had different rules for PMSI timing.
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Zachary Hughes
•You're thinking of inventory PMSI which can be different. For equipment PMSI it's generally 20 days under UCC Article 9, but you're right that there can be state variations.
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Chris King
•This is getting confusing. How am I supposed to know if my lender filed in time?
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Carter Holmes
I had a nightmare situation last year where we thought our equipment lender had PMSI protection but they filed late and we found out during a bankruptcy proceeding. Nearly lost everything to a blanket lien holder who had filed years earlier. Now I always verify PMSI filings myself using document checking tools.
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Chris King
•How do you verify that? Just check the filing date against when you got the equipment?
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Carter Holmes
•I upload all the documents to Certana.ai's verification tool. It cross-checks the purchase agreements, UCC filings, and dates to make sure everything aligns properly for PMSI status. Takes like 2 minutes and gives me peace of mind.
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Sophia Long
•That sounds really useful. I never thought about double-checking my lender's work but after reading this thread maybe I should.
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Angelica Smith
Just to add some clarity here - PMSI only applies to purchase-money transactions. If you're refinancing existing equipment or using equipment as collateral for working capital, that's NOT a PMSI situation. The financing has to be directly tied to acquiring the specific collateral.
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Chris King
•OK that makes sense. In my case it's definitely new equipment financing so sounds like PMSI applies.
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Logan Greenburg
•Also worth noting that PMSI priority is limited to the purchase price. If you finance $100k equipment but also get $20k working capital on the same loan, only the $100k portion gets PMSI treatment.
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Charlotte Jones
The practical impact is huge. Without PMSI status, your equipment lender might be subordinate to existing blanket lien holders. With PMSI they jump to first position on that specific equipment even if other lenders filed UCC-1s years earlier. It's like a VIP pass for security interests.
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Chris King
•So the lender should definitely want PMSI status if they can get it. I should make sure they're planning to file for it.
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Charlotte Jones
•Absolutely. Any competent equipment lender will insist on PMSI filing. If they're not mentioning it or seem unclear about it, that would be a red flag for me.
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Lucas Bey
•I've seen deals fall apart because lenders didn't understand PMSI requirements. The borrower had existing liens and without PMSI the new equipment loan wasn't adequately secured.
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Harper Thompson
One thing to watch out for - make sure the UCC-1 filing properly describes the collateral and matches your purchase documentation. I've seen PMSI claims fail because the collateral description was too vague or didn't match what was actually purchased.
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Chris King
•How specific does the collateral description need to be for PMSI?
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Harper Thompson
•Should be detailed enough to identify the specific equipment being financed. Serial numbers are ideal but at minimum make, model, and quantity. Generic descriptions like 'equipment' won't cut it for PMSI purposes.
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Caleb Stark
I always recommend getting copies of all UCC filings from your lenders and reviewing them carefully. Mistakes happen and you don't want to discover them later during a crisis. Document verification tools like Certana.ai can catch inconsistencies between your purchase docs and the UCC filings that might affect PMSI status.
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Chris King
•Good point. I'll definitely request copies of any filings and have them checked.
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Jade O'Malley
•Smart approach. I learned this lesson the hard way when a filing error cost me PMSI priority and nearly tanked a deal.
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Hunter Edmunds
Don't forget that PMSI also applies to proceeds. If you sell the equipment, the PMSI lender typically maintains their priority position in the sale proceeds, which is another advantage over regular security interests.
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Chris King
•That's good to know. So even if I eventually sell or trade the equipment, the PMSI lender stays protected.
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Hunter Edmunds
•Exactly, though there are some technical rules about proceeds that can get complicated. The key point is PMSI gives broader protection than just the original collateral.
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Ella Lewis
Bottom line - if you're doing equipment financing where the loan proceeds are used to buy the equipment being pledged as collateral, make sure your lender files a PMSI UCC-1 within 20 days of delivery. It's the same form as regular UCC-1 but gives your lender much better priority protection.
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Chris King
•Thanks everyone. This has been really helpful. I feel much more confident about discussing this with my lender now.
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Rachel Clark
•Good luck with your equipment financing! PMSI is definitely something worth understanding and making sure gets handled correctly.
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Andrew Pinnock
Just want to echo what others said about document verification. I use Certana.ai to upload my purchase agreements and UCC filings to make sure everything matches up for PMSI purposes. Takes the guesswork out of whether the filings are done correctly.
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Brianna Schmidt
•How does that work exactly? Do you just upload PDFs and it tells you if there are problems?
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Andrew Pinnock
•Pretty much. You upload the purchase docs and UCC filings and it cross-checks debtor names, collateral descriptions, dates, amounts - all the stuff that has to align for proper PMSI status. Catches errors you might miss manually reviewing.
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ShadowHunter
One more thing to consider - if you have multiple pieces of equipment being financed, make sure each piece is properly identified in the PMSI filing. I've seen situations where a blanket description covered some equipment but not others, which created gaps in the PMSI protection. Also, if you're doing a lease-purchase arrangement rather than straight financing, the PMSI rules can be different, so definitely clarify with your lender what type of transaction structure they're using.
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Liam Sullivan
•That's a really important distinction about lease-purchase vs. straight financing that I hadn't considered. Does the PMSI priority work the same way in lease arrangements, or are there different rules since technically the lessor retains ownership? I'm trying to understand all the variations since my lender mentioned they might structure it as a lease with purchase option.
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