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Do you know if a lien exists against your company?

Running a business undoubtedly ties up a great deal of your time. You have to make sure your company operates smoothly and that your employees carry out their duties. You must also make sure that your company does not suddenly face any serious financial issues.

Like most Arizona small business owners, you likely took out a small business loan when you first started your company. While this step is common and useful, you may need to make sure that everything relating to that loan has remained on the up-and-up. You may think that you paid your loan in full only to dig deeper and find that a lien has been levied against your company or a business asset.

Finding a lien

In some cases, business owners do not know that liens have been placed on their companies. However, if you have taken out a business loan, the possibility of a lien exists. Additionally, some liens may exist for legitimate reasons, some for fraudulent reasons, and some may be mistakes.

In order to determine whether a lender has filed a lien against your company, you may need to contact the Secretary of State's office or you could find out online.

UCC lien

Lenders often use Uniform Commercial Code (UCC) liens in order to make sure that they do not entirely lose out on a loan in the event that you or your company files for bankruptcy. If you have ever taken out a small business loan, a lender has likely placed a lien on your company.

This lien may not seem like an issue if you made all of your payments on time and paid the loan in full, but if the lien still exists it could damage your chance of obtaining another loan in the future.

Another lender may see a lien against your company and assume that another lender could obtain your business assets in the event of a bankruptcy or loan default. As a result, your new prospective lender may not want to approve your loan due to increased risk of losses.

Addressing liens

If you do find that a lender has filed a lien against your company, it's important to determine why the lien exists and what you can do about it. In some cases, you may need to dispute a lien and could face litigation. If this situation arises, having experienced legal counsel could make a considerable difference in your case.

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