Freight Factoring: Permission to File UCC-1
Beware of Unscrupulous Freight Factoring Companies
Less than forthright factoring companies are known to file a UCC-1 as soon as you apply.
Prior to entering into a binding agreement, a factoring company will file a Uniform Commercial Code (UCC-1) to secure their interest in a trucking company. This is standard practice with all Lenders and requires a client’s permission to be executed. However, that being said, less than forthright factoring companies are known to file a UCC-1 as soon as a company applies for factoring. The sole purpose for this unscrupulous activity is to make it difficult for trucking companies to go with another factoring company.
They manage this by finding creative ways to have clients sign off prior to actually signing a factoring agreement. For instance, it may be in the wording of the application form that is submitted when first seeking information from the factoring company.
Look for:Look for:a factoring company that waits until you have an agreement in principle prior to filing a UCC-1.
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