Receivables Pledge Agreement Template for the United States

A Receivables Pledge Agreement is a secured financing document that allows you to use your company's accounts receivable as collateral for a loan or credit facility. Under United States law, this agreement creates a security interest in your receivables while establishing the lender's rights to collect payments from your customers if you default on your obligations. The document must comply with the Uniform Commercial Code Article 9 to ensure the security interest is legally enforceable and properly prioritized.

When do you need this document?

You need a Receivables Pledge Agreement when seeking asset-based financing where your accounts receivable serve as primary collateral. This typically occurs during working capital loans, revolving credit facilities, or factoring arrangements where lenders require security beyond personal guarantees. Manufacturing companies often use these agreements to finance inventory purchases using future sales as collateral. Small businesses frequently rely on receivables pledges to access immediate cash flow while maintaining control over customer relationships. The agreement becomes essential when traditional unsecured lending is unavailable or when you want to secure more favorable interest rates through collateralized borrowing.

Key legal considerations

The agreement must contain precise descriptions of pledged receivables to satisfy UCC Article 9 requirements, including whether the pledge covers existing receivables, future receivables, or both. You must include detailed representations about receivable quality, customer creditworthiness, and the absence of prior assignments or liens. Collection provisions should specify whether you retain collection rights or transfer them to the pledgee, and establish procedures for handling customer payments and disputes. Default provisions must clearly define triggering events and the pledgee's enforcement rights, including direct collection from account debtors. Consider including carve-outs for government contracts subject to the Anti-Assignment Act and Federal Assignment of Claims Act restrictions. The agreement should address priority issues under the Federal Priority Statute if any receivables involve federal obligations.

Legal requirements in United States

Under UCC Article 9, the security interest must be properly perfected through filing a UCC-1 financing statement in the appropriate state filing office, typically where your business is organized or has its chief executive office. The security agreement must be authenticated by you as the debtor and contain a sufficient description of the collateral that reasonably identifies the receivables. For receivables involving federal contracts, you must comply with the Federal Assignment of Claims Act, which requires written notice to the contracting officer and adherence to specific assignment procedures. If your business operates across multiple states, you may need to file financing statements in each jurisdiction where receivables are generated. The agreement must include provisions for maintaining perfection if your business relocates or changes its organizational structure. Consider the impact of the Bankruptcy Code on the enforceability of your security interest and include appropriate protection mechanisms.