CredibleLaw guide explains how businesses can clear MCA liens under new SBA rules

CredibleLaw published a guide on October 6, 2026, to help business owners navigate merchant cash advance liens, subordination agreements and UCC lien removal as new SBA lending procedures took effect. The release arrives after SBA rules narrowed MCA refinancing options and left many borrowers needing conventional lenders or negotiated lien changes to close new financing.

Why it matters: - Merchant cash advance liens can block lower-cost refinancing by keeping a lender out of first position on business collateral. - The new SBA procedures that took effect Oct. 1, 2026, make direct MCA refinancing with SBA proceeds unavailable in most cases, pushing many owners toward conventional lenders. - The guide is aimed at business owners trying to keep a deal alive after a lien search surfaces an MCA filing.

What happened: - Credible Law, a national legal resource and attorney referral network, published a guide on Oct. 6, 2026, explaining MCA subordination agreements and UCC lien removal. - The guide focuses on how an existing MCA funder can move behind a new lender so a bank loan, equipment loan or credit line can close. - A CredibleLaw spokesperson said many owners lose financing at the lien-search stage because the MCA filing claims first position and the bank will not fund in second. - The spokesperson said subordination is often the solution and can also be the funder’s best financial option. - The guide is available on CredibleLaw’s page on the MCA subordination agreement.

The details: - An MCA lender typically files a UCC-1 financing statement soon after funding. - The filing can cover receivables, deposit accounts, inventory, equipment and general intangibles, including later-acquired assets. - Business owners can check UCC records in the secretary of state’s online database in the state where the business is organized. - For an LLC or corporation, the search is usually in the state of formation, not necessarily the state where the business operates. - Under Article 9 of the Uniform Commercial Code, the first filer generally has priority in the same collateral. - New lenders usually want a payoff with a termination statement, a release of specific collateral or a signed subordination agreement before closing. - A subordination agreement lets the MCA funder keep its lien while agreeing that the new lender gets paid first from some or all collateral. - UCC Section 9-339 allows a creditor to subordinate priority by agreement. - Subordination is not the same as subrogation. - Subordination is voluntary, and an MCA funder generally cannot be forced to agree. - A funder may agree when refinancing lowers the borrower’s payment burden and reduces the risk of default, litigation or bankruptcy. - If a business enters Chapter 11, the automatic stay can halt collection and post-filing receivables are generally outside a pre-bankruptcy lien under U.S. bankruptcy law. - If the MCA is satisfied, the borrower can demand a termination statement in writing. - For non-consumer collateral, UCC Section 9-513(c) requires the secured party to file or send the termination statement within 20 days after an authenticated demand. - If the secured party does not comply, UCC Section 9-509(d) can allow the debtor to file a termination statement itself if the record shows authorization. - UCC Section 9-625(e) provides $500 statutory damages for certain failures to comply, plus provable actual damages. - A lien may sometimes be challenged without full payoff if the filing was unauthorized, filed against the wrong entity, filed after settlement or payoff, or inconsistent with Article 9. - UCC Section 9-515 generally makes a financing statement effective for five years unless continued in the six months before lapse. - A UCC-3 can terminate, release specific collateral, assign a lien, continue it or record a change in priority. - A UCC lien does not itself let an MCA funder take money from a bank account; debits usually come from ACH authorization in the contract. - Seizing funds through a court process typically requires a judgment or an enforceable confession of judgment. - A UCC filing can hurt business credit because lenders, equipment finance companies, factors and some vendors review it. - Multiple MCA filings can make new financing harder until the liens are addressed. - Most secured lenders will require a lien payoff, release or subordination before funding, though some will lend if the MCA lien is properly subordinated. - SBA procedures have excluded MCAs and factoring agreements from eligible debt refinancing since June 1, 2025. - SOP 50 10 8.1, effective for SBA loan numbers on or after Oct. 1, 2026, allows a conditional path only after the advance is converted into a term loan and that loan amortizes for at least 24 months. - The borrower also cannot enter new sales-based financing after the conversion. - Bankruptcy does not automatically erase a valid lien, but it can limit how the lien works and may reduce the secured claim to collateral value under bankruptcy rules. - Smaller businesses may qualify for Subchapter V. - Congress passed H.R. 7730 to raise the Subchapter V debt limit to $7.5 million, but the current limit remains $3,424,000 until the bill becomes law. - Draft subordination agreements can include terms that harm the borrower, including cross-default clauses, unchanged daily payments, new personal guaranties, reaffirmed confession-of-judgment language, added fees or no obligation to file an amended UCC record. - A sound agreement is limited in scope, clear about payments and paired with a recorded UCC-3. - CredibleLaw says owners should gather every MCA agreement, addendum and renewal; bank statements showing debits; UCC search results; the new lender’s term sheet; default notices or court papers; and records of reconciliation requests before speaking with counsel. - CredibleLaw said an attorney can help reach decision-makers, review the MCA contract for leverage, negotiate the draft and coordinate multiple funders.

Between the lines: - The guide frames MCA liens as a financing problem, not just a collections problem, because a lien can block cheaper capital before a borrower reaches default. - The timing matters: SBA rule changes have narrowed one exit route just as many businesses are looking for ways to replace high-cost cash advances. - Subordination gives lenders a path to fund without demanding a full lien wipeout, which can be faster than litigation or payoff negotiations. - The detailed discussion of bankruptcy rights suggests MCA funders may face weaker leverage than many borrowers assume.

What's next: - Business owners facing an MCA lien will likely need to decide quickly whether to seek a payoff, negotiate subordination or challenge the filing. - Borrowers using SBA financing should verify current refinancing rules with an SBA lender before assuming an MCA payoff is eligible. - Businesses that expect a lien release should confirm that the UCC-3 is actually filed and reflected in a follow-up search. - CredibleLaw says owners can contact the organization at 888-201-0441 for resources and referrals.