The assumption that a UCC lien confines itself to business property is accurate in the ordinary case and dangerously wrong in several others. Article 9 of the Uniform Commercial Code governs security interests in personal property, and the word “personal” in that statute does not mean what most business owners believe it means. It refers to movable property as opposed to real estate. When the debtor named on the financing statement is you, individually, the lien reaches whatever the security agreement describes, and that description can extend well beyond the walls of your business.
You Signed the Agreement as an Individual Debtor
The most direct path. If the MCA agreement or loan document names you personally as the debtor, rather than your LLC or corporation, the UCC-1 financing statement filed against you individually creates a security interest in your personal property. The filing jurisdiction for an individual debtor is determined by the state of principal residence, and the collateral description in the security agreement governs what the lien covers. A blanket description covering “all assets” of an individual debtor means all of that individual’s personal property, not merely business property.
This arrangement appears more frequently than one might expect, particularly with sole proprietorships that lack a separate entity structure and with business owners who signed funding agreements without recognizing the distinction between signing in a representative capacity and signing in an individual capacity. The signature block determines this. If your name appears without a corporate title next to it, the funder may have created an individual obligation.
The Security Agreement Includes Personally Owned Collateral
Even when the business entity is the named debtor, the security agreement can describe collateral that belongs to you individually. Equipment you purchased before forming the business, a vehicle titled in your personal name but used for business purposes, investment accounts pledged as additional security. The UCC permits this cross-collateralization when the owner of the property has authorized the security interest. If you signed a provision granting the funder an interest in “all equipment used in the operation of the business, wherever located and however titled,” your personally owned equipment may be covered.
The collateral description controls. A broadly drafted security agreement can pull individually owned property into the lien’s orbit without a separate UCC filing against you personally.
You Operate as a Sole Proprietor
There is no legal distinction between a sole proprietor and the business. The business is you. Every asset of the business is your personal asset, and every personal asset is, in theory, available to satisfy business obligations. A UCC filing against your sole proprietorship is a filing against you individually, and the collateral described in the security agreement can encompass personal bank accounts, personal equipment, personal vehicles, and any other personal property within the description’s scope.
Many sole proprietors who obtained MCAs did so under a trade name, a “doing business as” designation, and believed they were borrowing as a business. They were borrowing as themselves. The DBA does not create a separate legal entity. It creates a name. In autumn, when the business slows and the daily debits continue, this distinction becomes the wall that was never built.
The Funder Filed Against Both You and the Business
Some funders file two UCC-1 statements: one against the business entity and one against the individual owner. This dual filing is not uncommon in the MCA industry, particularly when the funding amount is large or when the funder perceives elevated risk. The filing against you individually perfects a security interest in your personal assets, separate from and in addition to the lien on business assets.
Check the secretary of state’s records in your home state. A search under your personal name may reveal filings you did not know existed. The security agreement you signed likely authorized these filings, but the authorization may have been buried in boilerplate language that did not receive separate attention during the closing process. The filing is valid if the authorization was granted, even if you did not specifically notice the provision.
You Commingled Business and Personal Funds
Commingling does not technically expand the scope of a UCC lien, but it creates practical exposure that functions similarly. If business revenues and personal funds flow through the same account, and the security agreement grants the funder an interest in “deposit accounts” or “all accounts of the debtor,” the funder may argue that the commingled account falls within the collateral description. The business funds in that account are clearly covered. The personal funds deposited alongside them become entangled.
A court reviewing a dispute over commingled funds would need to trace the sources, but the burden of tracing falls on the party asserting that specific funds are excluded from the lien. If you cannot demonstrate which dollars in the account originated from personal sources, the funder’s position strengthens. This is a problem of evidence, not of law, but the practical result is the same.
A Confession of Judgment Converts to Personal Liability
This scenario operates through a different mechanism but produces a similar outcome. Many MCA agreements, particularly those governed by New York law prior to the 2019 legislative restrictions, included confessions of judgment signed by the business owner individually. When the funder executes on a confession of judgment, the resulting judgment attaches to the individual, and a judgment creditor can pursue the individual’s personal assets through execution, garnishment, and judgment liens on real property.
The confession of judgment is not itself a UCC lien, but the personal guarantee that often accompanies it creates the basis for individual liability, and a judgment obtained on that guarantee becomes a lien of a different sort. New York’s 2019 amendments restricted the use of confessions of judgment against out-of-state debtors in transactions under $250,000, but the restriction applies only to confessions, not to personal guarantees themselves. The guarantee remains enforceable even where the confession has been curtailed.
Each of these scenarios reflects a different failure point in the barrier between business obligations and personal exposure. The entity structure, the signature block, the collateral description, the account management, the guarantee provisions. Any one of them can create a channel through which a business debt reaches personal property. When two or three of them coincide in the same funding arrangement, the exposure compounds.
Understanding which of these scenarios applies to your situation requires reviewing the specific documents you signed and the filings that were made. A consultation with counsel who has examined these structures before is where that review begins. A first call costs nothing and changes the calculus.
