The Dangers Of Stacking In Small Business Financing


Apr 22, 2020
Hi All,

My Company specializes in helping small business owners get access to affordable working capital. One of the biggest issues we have seen with our clients, is that they are over-stacked with multiple merchant cash advances (MCAs). We have four really good referral partners whom help business owners get out of this kind of debt by either refinancing or restructuring their payments.

What Is Stacking?
Stacking is the act of taking out multiple short-term loans or merchant cash advances (MCAs) at the same time, which leaves a borrower with the responsibility of having to make payments to multiple lenders simultaneously. Merchants commonly take out multiple loans when they discover that not enough capital was received on the first advance to fully cover their projects or other expenses. Though stacking is not always bad, the real problem arises when the additional funds were accepted merely because they were offered the funds, or when the merchant was struggling to make payments on their existing loan positions. This places the merchant at significant risk of defaulting on their payments. Stacking can increase the amount of debt liabilities and seriously impact a business owner's cash flow.

Even if the business is able to make the payments, having multiple debts owed to multiple lenders and increase their chances of missing payments. Business owners who are over-stacked with multiple MCAs face the greatest risks of going under during the pandemic. Recently, an FTC official had reported to NBC News that small business owners borrowed billions of dollars from these unregulated companies known to engage in aggressive collections practices when the merchant is unable to make their payments. When merchants fall behind on payments, some of these lenders have been known to send threatening emails and text messages, or engage in other improper collection practices.

You can read more on this topic by clicking this link to our blog:

Kindest Regards,

Kelly Giambra, MSA-MBA
Business Development Consultant
Founder & CEO of Back Business Solutions

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