Plain-English guide to the Illinois Uniform Commercial Code for small business owners, with a slide show, who is covered, UCC-1 lender filings and sales rules.
Last reviewed October 29, 2026 · General information, not legal advice
General information only, not legal advice. CPA Tax Payroll and Accounting Corp is a CPA firm, not a law firm. Laws change: confirm with the official source or a licensed attorney before you act. Read the full notice.
The Illinois Uniform Commercial Code, usually called the UCC, is the state's rulebook for selling goods, handling checks and wire transfers, and borrowing against business assets. It is found at 810 ILCS 5. No agency enforces it. People bring claims in court, and the Illinois Secretary of State runs the office where most lender claims on business assets are filed. This page is for owners of small businesses, freelancers and nonprofits that sell products, take secured loans or manage bank accounts.
Slide show: The Illinois UCC in seven slides
What it does
Illinois's commercial code sets rules for selling goods, paying by check or wire, and borrowing against business assets.
Who it covers
Any business. A contract for services alone is outside the sales article, and a mixed deal turns on whether goods predominate.
The sales rule
A goods sale priced at $500 or more needs a signed record to be enforceable, with listed exceptions.
The lender rule
To protect a claim on business assets, a lender usually files a UCC-1 with the Secretary of State. The statute sets the filing fee at $20.
The deadline
A filed financing statement lasts 5 years. A continuation can be filed only in the 6 months before it lapses.
The penalty
Filing without authority, or ignoring a signed demand to end a paid-off filing, can cost $500 per instance.
The tip
Many owners ask for a termination statement once a loan is paid off and reconcile bank statements each month.
Who is covered
A security interest is a lender's claim on specific property that backs a loan. A financing statement is the public notice of that claim.
Topic
What the code says
Sales of goods (Article 2)
Applies to goods. In a mixed goods-and-services deal it reaches the goods side, and the whole deal if goods predominate, though other law can still govern the non-goods parts.
Services only
Outside Article 2.
Business size
No size threshold.
Merchants
A seller who is a merchant carries an implied warranty of merchantability. Between merchants, a confirming record can satisfy the signed-record rule unless someone objects within 10 days.
Lender filings
Secretary of State when Illinois law governs the filing, generally a debtor located in Illinois. The county recorder takes fixture filings, timber to be cut and as-extracted minerals.
Consumer sales
Article 2 does not override statutes regulating sales to consumers or farmers. See the Consumer Fraud Act.
How it touches your taxes and payroll
The UCC has no tax rules, and sales tax on goods sits outside it; see our sales and use tax service. A secured business loan normally comes with a security agreement and a UCC-1, so the lender's claim appears in public records. The Secretary of State's UCC page links to a "UCC/Federal Tax Lien Database Search" that covers both kinds of filing. Two bank sections, 3-405 and 4-406, bear on bookkeeping controls, and secured loans connect to working capital and bank loans.
