The short answer
A second position advance sits behind an existing one and is a normal product where the business genuinely supports both remittances and the first position is disclosed. It becomes stacking — the destructive version — when the total remittance exceeds what the receipts can carry, or when the first funder was not told and the agreement prohibited it.
The words get used interchangeably and they should not be. Second position describes where an advance sits in the queue; stacking describes piling obligations onto a business that cannot carry them. One is a product and the other is an outcome.
| Legitimate second position | Stacking | |
|---|---|---|
| First position disclosed? | Yes, to everyone | Often not |
| Total remittance | The receipts carry it comfortably | Consumes most of the takings |
| First agreement | Permits it, or is silent | Prohibits it |
| Merchant understands | Both obligations, in dollars | The new money |
| Funder pricing | Prices the risk knowingly | Priced without the full picture |
Check the first agreement
Many advance agreements prohibit additional financing, and taking a second position in breach can trigger a default on the first — accelerating the whole balance at exactly the moment the merchant needed money. Ask to see the first agreement before you place anything behind it. Merchants frequently do not know what theirs says.
What to tell the merchant
- The combined daily figure, in dollars, not two separate percentages.
- What that leaves them, on an average day, after both.
- That the first agreement may prohibit it, and what happens if it does.
- That second position money costs more, and why — the funder is behind somebody else in the queue.
A merchant who has been shown the combined daily number and still wants it is making a decision. One who has only been shown the new money is not.