What is the purpose of a financing statement under UCC Article 9?

• A. Public notice to establish priority.
• B. Creates the security interest.
• C. Enforces the loan.
• D. Discharges liability.

Answer: (A)

Public notice to establish priority among secured creditors is what a financing statement does under UCC Article 9. Filing it with the appropriate government office puts third parties on notice that a creditor has an interest in the debtor’s collateral. That notice matters because, if the debtor defaults, the order in which secured parties can claim proceeds from the collateral is largely determined by who has perfected their interest and when. The financing statement is a tool for perfection and priority, not the creator of the security interest itself.

Remember, the security interest attaches when there’s agreement, value given, and the debtor has rights in the collateral. The financing statement then often perfects that interest, giving notice to others and helping protect the secured party’s priority. It does not enforce the loan, nor does it discharge liability.