We are looking at doing a commercial loan-floor plan financing for a dealer for the sale of dump trailers. What is the best way to ensure our lien, a blanket UCC to cover all future purchases, and then have our loan officer do timely inspections to keep a status of the inventory?

Thanks in advance.

We have a customer that has a loan with another institution that has a blanket UCC on business assets; they filed first. The customer has a flooring line with us so every unit that they floor with us, we prepare a purchase money security agreement and UCC for that unit only and send the notification to the first lender that has the blanket UCC. It is a lot of work for us but because there is another lender involved, this is what we have to do. If you are the first lender, then you may be perfected with just the blanket UCC.

Yes, we will be the first lender, so we shouldn't have to worry about all of the additional filings. Thank you!

You really need to sit down with legal counsel on this and discuss the prudent method to control collateral for this type of lending if you normally do not do it. It has serious risks. You need some pretty rock solid loan agreements that outline the specific responsibilities of the borrower. Floor plan lending is not for the faint of heart and many banks have specific well trained areas that handle this product.