DEFINITION of Financing Statement
A financing statement is a document outlining the financing agreement between a lender and a borrower pertaining specifically to the collateral. It is filed under the Uniform Commercial Code.
BREAKING DOWN Financing Statement
The financing statement, also known as a UCC-1, is filed by the creditor. Its primary purpose is to give notice of a lien against the property collateral and to inform other creditors of that claim. While in other cases a lien is filed when a party has failed to meet an obligation, such as paying taxes, this lien exists with the filing of the UCC-1. Knowledge of this lien may prevent other lenders from offering additional credit to the borrower. Typically, the form is filed with the secretary of state in the state where the debtor is located.