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Stacking is the most loaded word in this industry and it describes something quite mundane: a merchant with more than one advance running at once.
Why funders treat it as a risk
A funder buys a share of future receipts. A second funder buying a share of the same receipts does not create new revenue — it divides what was already committed. The first funder underwrote a merchant whose receipts could carry one remittance and now has one carrying two.
Illustrative proportions. Nothing about the business changed across those three rows — only how much of its daily takings is already committed before it pays anyone else.
What agreements usually say
- Many contain restrictions on taking additional financing while the advance is outstanding.
- Some treat a new position as an event of default, which can accelerate the balance.
- Some require notice or consent rather than prohibiting it outright.
- Enforcement varies widely, and the existence of a clause is not the same as it being acted on.
It is not automatically wrong
A merchant with one modest position and strong receipts taking a second, disclosed, at a price that reflects it, is an ordinary transaction. The problems are concentration and concealment rather than the number two.
What genuinely damages merchants is the fourth and fifth position, where remittances consume so much of the daily take that the business cannot operate — and each new advance exists largely to service the previous one. That pattern is visible in bank statements and it is what underwriters are scanning for.
Handling a merchant who already has positions
- Establish how many and roughly what the remittances total, on the first call.
- Expect a higher factor and a smaller offer. That is arithmetic, not a negotiation.
- Consider whether a consolidation makes more sense than another position.
- Place it with a funder that knowingly takes second and third positions, rather than hoping one that does not will make an exception.
- Never submit hoping the statements will not show it. They will.
Questions brokers ask
What is stacking in merchant cash advance?
A merchant taking an additional advance while an earlier one is still running, so two or more daily remittances draw on the same receipts. Funders object because it dilutes the receivables they purchased and raises default risk on a position already deployed.
Is stacking illegal?
No, but it is frequently restricted by contract. Many advance agreements limit additional financing while outstanding, some treat a new position as an event of default that can accelerate the balance, and some require notice or consent. Enforcement varies, and a clause existing is not the same as it being acted on.
How many positions is too many?
There is no fixed number — it depends on how much of the daily receipts the existing remittances already consume. One or two disclosed positions on strong receipts is ordinary. The pattern that damages merchants is the fourth and fifth, where each new advance largely exists to service the previous one.
Can a broker place a file for a merchant who already has positions?
Yes, with disclosure and the right funder. Expect a higher factor and a smaller offer as arithmetic rather than negotiation, consider whether consolidation fits better, and place it with a funder that knowingly takes second and third positions instead of hoping one that does not will make an exception.
How do funders find out about undisclosed positions?
The bank statements. Daily or weekly debits to known funders are visible, and UCC filings are public. A position you disclosed is a pricing input; one the underwriter finds is a lost submission and a dent in your standing with them.
Alex Makowski
Founder, Infinite Bookings
Runs the lead generation operation behind Infinite Bookings — paid traffic, the funding application, and the delivery pipeline that puts records into brokers’ CRMs.
Reachable directly at alex@infinitebookings.com or 732-609-7182.