Commercial loans are often secured by a borrower’s business assets, which frequently includes items like equipment, inventory, accounts receivable, and real estate. Most lenders are very familiar with these types of collateral and are comfortable perfecting their security interests in such collateral by filing a UCC Financing Statement or Mortgage in the appropriate state or county offices, as applicable. However, depending on the nature of the borrower’s business or the details of the specific loan transaction, lenders may also seek to perfect a security interest in other types of collateral that would not always be covered by a UCC Financing Statement or Mortgage.

Many borrowers are owners of various licenses, which can be very valuable, and lenders frequently require that such licenses serve as collateral for their loan. It can be easy to assume that such licenses would be covered by a lender’s “all business assets” UCC Financing Statement, but that is not always the case. For example, depending on the state where a borrower is operating, a lender may or may not be able to take a security interest in a borrower’s liquor license. Some state statutes explicitly prohibit such security interests, while others may either allow such security interests or allow the future transfer of the license, so it is important for lenders to understand the laws and procedures in the state where their borrower is operating.

Similarly, a borrower that operates a radio station will normally have one or more Federal Communications Commission (FCC) licenses that allow them to operate and broadcast various content. These licenses are valuable, but they cannot be pledged as collateral for a loan because such security interests are currently prohibited by the FCC. Instead, a lender can attempt to take a security interest in the proceeds of the sale of such licenses, which would generally be perfected by adding additional language to the Security Agreement and related UCC Financing Statement.

Patents, copyrights, watercraft, and aircraft are also examples of common collateral that may require more than the usual UCC Financing Statement. For instance, patents and copyrights should be perfected with an appropriate UCC Financing Statement as well as the filing of a Security Agreement with the United States Patent and Trademark Office or United States Copyright Office, as applicable. Similarly, security interests in watercraft may also require the filing of documentation with the U.S. Coast Guard, and security interests in aircraft may require additional documentation to be filed with the Federal Aviation Administration.