Your MCA Funder Is Contacting Your Customers: What a UCC Notice Means and What to Do

By Century Relief · October 20, 2026

Few things hit a business harder than a call from your best customer saying a funder has told them to stop paying you. When a merchant cash advance falls behind, some funders send a letter, usually called a UCC or 9-406 notice, directly to your customers. The goal is to redirect your receivables to the funder.

This guide explains what that notice is, what your customers are legally required to do, what they can ask for, and the steps you should take right away.

What is a UCC 9-406 notice?

Section 9-406 of the Uniform Commercial Code covers what happens when a business's accounts receivable have been sold or assigned to someone else. The customer who owes the money is called the "account debtor." Once an account debtor receives a proper notice that the account has been assigned and that payment should go to the new owner, paying the original business no longer discharges the debt. In plain terms, a customer who ignores a valid notice and keeps paying you could be forced to pay again.

Most merchant cash advance contracts are written as a purchase of your future receivables, not a loan. That structure is what funders rely on when they send these notices: they claim they own part of what your customers owe you.

Why MCA funders send these notices

Notices usually go out after a funder decides you are in default: debits are bouncing, you changed bank accounts, you blocked the ACH, or you stopped answering. A letter to your customers is fast and cheap compared with a lawsuit, and it creates pressure. Customers get nervous, payments stall, and the business owner often calls the funder to stop it.

Industry commentators have noted that many of these notices overreach. A funder is entitled to redirect payment only if it actually holds a valid, enforceable assignment of those specific receivables, and in some cases another lender, such as a bank with a blanket lien, holds a senior claim to the same accounts.

What your customers have to do

• They cannot simply ignore it. If the notice is properly "authenticated" under the UCC, which can be satisfied by a letter on the funder's letterhead, a customer who keeps paying you risks paying twice.
• They can ask for proof. Under UCC 9-406(c), the customer may require the sender to provide reasonable proof that the assignment was made. If the funder doesn't provide it in a reasonable time, the customer may keep paying you.
• They shouldn't stop paying everyone. Many customers freeze all payments until they understand the situation. That's the outcome that hurts you most, which is why you need to reach them first.

What to do in the first 48 hours

1. Get a copy of the notice. Ask every customer who received one to send it to you. Note the date, who signed it, and exactly what it claims.
2. Call your key customers. Explain calmly that you're aware of the letter, that you're addressing it, and that they're entitled to ask the funder for proof of the assignment before changing where they pay.
3. Pull your contract. Find the sections on default, the "specified percentage" of receivables purchased, reconciliation, and the funder's remedies. A notice claiming more than the contract gives the funder is a problem for the funder, not for you.
4. Check the UCC filings. Search your state's UCC database for every financing statement on your business. If another lender filed first, its claim to your receivables may come before the MCA funder's.
5. Talk to an attorney. If notices are disrupting your revenue, an attorney can demand that the funder withdraw overreaching letters and can address the dispute directly.
6. Open a negotiation. Funders send notices to get paid, not to shut you down. A realistic restructured payment plan or settlement is often the fastest way to get the notices withdrawn.

Things not to do

• Don't tell customers to ignore the notice. If it turns out to be valid, they could end up paying twice, and you lose their trust.
• Don't move receivables or open new accounts to hide payments. That can be treated as a further breach and can trigger your personal guarantee.
• Don't take another advance to cover the gap. Stacking usually makes the next notice more likely, not less.

How Century Relief helps

Century Relief works with an attorney to negotiate directly with MCA funders. When notices are going out to your customers, the priority is to stabilize your cash flow: get the notices withdrawn, replace daily debits with payments the business can sustain, and put any settlement in writing, including a release of your personal guarantee and termination of the funder's UCC filing once you're paid up. You can see where you stand with our free MCA Payment Relief Calculator.

Frequently asked questions

Can an MCA funder contact my customers?

Often, yes. Many MCA contracts are written as a purchase of future receivables, and after a default the funder may send your customers a UCC 9-406 notice telling them to pay it directly.

Do my customers have to pay the MCA funder?

If the notice is valid and properly authenticated, a customer who keeps paying you may have to pay twice. But under UCC 9-406(c) the customer can first demand reasonable proof of the assignment and may keep paying you if it is not provided.

Can I stop an MCA funder from sending notices to my customers?

Notices that overreach what your contract or the law allows can be challenged, usually through an attorney. In practice, negotiating a restructured payment plan or settlement is often the fastest way to get notices withdrawn.

Does a UCC notice mean I am being sued?

No. A UCC notice is a collection step that goes to your customers, not a lawsuit. A funder may still sue later, so it is a sign to act quickly.

This article is general information, not legal advice. Talk to a licensed attorney about your contracts, any notice or lawsuit, and any legal deadline.