First-Position UCC
A first-position UCC is a UCC-1 filing where the secured creditor holds priority over all subsequent UCC filers on the same collateral — the senior secured position, with first claim against the merchant's receivables in default scenarios.
Why This Matters
Position priority follows filing chronology under UCC Article 9. The first-filed creditor against a debtor's collateral pool holds first position; later filers hold subordinate positions. In MCA, first position carries the lowest credit risk and usually the lowest factor rates. Second, third, and fourth positions carry escalating risk and higher pricing. Most reputable MCA funders only fund first or second position deals; positions beyond third are typically only funded by high-risk specialty lenders at premium pricing. Position information drives both underwriting and lead prioritization.
Frequently Asked Questions
Frequently Asked Questions
Can a merchant terminate a first-position UCC?
Yes — once the underlying obligation is fully repaid, the creditor must file a UCC-3 termination statement releasing the security interest. Outdated UCC-1 filings against satisfied debts should be terminated; failure to terminate creates obstacles to subsequent funding.
How does UCC position affect MCA pricing?
First position typically: 1.20-1.40 factor rate, 6-12 month terms. Second position: 1.30-1.50 factor rate, 4-8 month terms. Third+ position: 1.40-1.70 factor rate, 3-6 month terms, available only from specialty funders. Each position step up represents 5-15% pricing premium.