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UCC & Corporate Due Diligence

Resource Guide for Legal and Financial Professionals

Choosing a Monitoring Solution that is Right for Factors & Asset-Based Lenders

January 22, 2015 Due Diligence, Lien Monitoring

As asset-based lenders and factors, you are aware that different loan types provide different risks and rewards, and as lenders and risk takers you look to capitalize on this fact. Because of the nature of your lending practices, there are specific solutions that have been designed to monitor a perfected security interest and assist secured parties in maintaining their perfected security interest once a UCC financing statement has been filed.

Many lien types, both voluntary and involuntary, could potentially affect a security interest and in the case of Federal Tax liens affect priority position on a perfected security interest. Considering this landscape, secured parties choose which programs and processes to utilize to address the risks associated with their lending practices.

Of the various monitoring options available some provide deep insight into specific risks, such as IRS pre-lien tax assessment monitoring which provides lenders valuable information on their customers’ tax payment histories. Other monitoring options, like state and county Lien Monitoring, provide wider coverage over numerous potential risks to a perfected security interest, including prompt alerts on federal tax lien filings, state tax lien filings, junior UCCs, fraudulently filed UCCs, bankruptcies and corporate changes.

Depending on the credit risk, many lenders choose to blend collateral monitoring options, like the two described above, as complementary services to optimize coverage and mitigate the negative impact the varying lien types can pose to a security interest. Learn more about monitoring program options here.

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