Definition:
Under the provisions of state Universal Commercial Code statutes, when personal property (equipment, inventory, and other tangible assets of a business) are used as collateral for borrowing, a UCC-1 statement is prepared, signed, and filed. This process is also called "perfecting the security interest" in the property, and this type of loan is a secured loan.
The filing creates a lien against the property, so the borrower may not dispose of the property without paying off the debt.
