Coffee Break

How to Use UCC Filings Data in Your Business

Image source: 

The application of the Uniform Commercial Code (UCC) is critical for financing individuals and businesses. When a lender approves a loan to a borrower, they use the UCC code to inform other creditors and the public of their interest on the loan’s collateral. The UCC filing can either be specific collateral UCC lien or blanket UCC lien. The specific collateral UCC lien involves using specific assets like equipment and buildings as security for the loan. The blanket lien allows the lender to claim all your assets if you default in repaying the loan. 

Most lenders prefer the latter as it is less risky. Besides notifying other lenders of the interest over the borrowers’ property, lenders can also use UCC filing to identify and avoid bad borrowers. If you provide alternative funding to individuals and businesses, you should use UCC filing as an essential tool for hunting reputable clients. Here are various ways you can benefit from UCC filing. 

For Improving Marketing Results

The UCC filing provides an effective way for any business to reach out to potential clients. Note that the UCC filings include all information regarding the collateral status and the details of the debtor. Lenders can use the results of the filing report to identify creditworthy customers and their credit capacity. They can then use the contact information to inform reliable customers about their products. For instance, they can send emails or text messages to the creditworthy customers depending on the collateral type and value. This strategy’s uniqueness is that the marketing personnel will be reaching out to persons who are used to debt financing. The chances are that conversion rates would be high.

For Collecting Accurate and Reliable Data

UCC filings help creditors in obtaining information about the debtor. Using the secured collateral, one can identify the names and the contact details of the creditor and the debtor. You can also obtain information about the state in which the agreement UCC was filed and the accurate date. Moreover, the data sourced from government filings is specific about the type of lien and is accurate. Thus, you can rely on this data to identify black spots in the market, create your contact list, and enhance your communication with other creditors.

For Encouraging Borrowers to Pay

When a lender announces a UCC lien to the public and other creditors, the chances are that most borrowers won’t extend credit to the borrower. If they do, they will give out a small credit at a higher interest to discourage further borrowing. Reliable borrowers will make efforts to repay the loan amount and secure their property from being seized. They also fear losing their credit score. Thus, UCC filing is an effective strategy for ensuring that creditors honor their payment obligations.

For Deciding on the Effective Marketing Strategy

It would be a bad idea to stick to the same marketing strategies even after identifying potential clients in the search results of the UCC filing. As an opportunist, you should devise strategies to win the interest of reliable clients in the market. You can reach them through a phone call, an email, or text messages. During your exchanges, explain why they should consider your products over your competitors. You can use the collateral information to gauge the most suitable product for each noted client. Your marketing team may also use the contact addresses of credible clients to request them for appointments. Once approved, they can visit them in attempts to win new prospects.

Image source: 

For Avoiding the Conflict of Interest Over Collateral

As mentioned earlier, UCC filing is specific on whether the collateral is specific or blanket. This helps creditors to determine whether to issue a credit to a particular borrower or not. For instance, if a borrower has a blanket UCC filing, it means that the lender has exclusive rights over the borrower property. Thus the borrower can’t use their property to secure another loan from another creditor. On the other hand, if the collateral is specific, the borrower can still secure another loan from the creditor but using a different property. As such, UCC filing can help you avoid issuing a secured loan against property, which is already at stake.

Now you should have a basic understanding of what UCC filing is and how to use it to improve your alternative financing business. You can use the filing results to identify the most reputable clients or devise a marketing strategy. Additionally, you can use the data to avoid risky borrowers and issuing loans against collateral, which is already at stake. However, all lenders should provide accurate information on the debtor’s details to allow for quick trailing.