If your business is considering alternative funding, chances are you’ve heard about a merchant cash advance (MCA). However—stacking multiple merchant cash advances can lead to serious trouble. In this post we’ll unpack exactly what this practice means, why it’s risky, how it plays out in real businesses, and what you can do instead.
Before diving into the risks of stacking, let’s clarify what an MCA is.
A merchant cash advance provides a lump sum up-front in exchange for a portion of your future sales (often credit card or receivable income).
It is typically repaid via daily or weekly automatic withdrawals of a set percentage of your daily sales or receivables.
Unlike a typical loan with fixed payments and interest, MCAs use factor rates and can have very high effective annual interest rates.
In short: MCAs are fast, flexible, but expensive and riskier than they appear.
Now that you know what one MCA is, let’s define the primary term.
“Stacking” refers to taking out multiple MCAs from different lenders simultaneously or in quick succession, without fully addressing the first advance before taking the next.
Each new advance becomes another “position” (2nd position, 3rd position, etc.).
The effect: overlapping repayment obligations and multiple daily/weekly deductions from your business’s revenue.
You have a cash-flow crunch and one advance didn’t cover it all.
A salesperson or broker tells you another advance is available and will help.
You believe you’ll pay off one and then take the next, but reality often traps you.
Let’s get to the core: stacking multiple merchant cash advances introduces a range of serious risks that can jeopardize your business.
Multiple advances mean multiple deductions (daily/weekly) from your revenue stream, reducing the cash available for operations.
If business slows, the fixed percentage or holdback still impacts you. You could be left with very little wiggle room.
Example: One business had 50% of its revenue going to repayment and still couldn’t cover costs.
Each advance has its own factor rate, fees and hold-back structure—stacking increases the total cost.
The effective APR of MCAs can exceed 300 % in some cases, and stacking magnifies that burden.
Taking another advance to pay off one you already have is a red flag. This is a classic debt spiral.
As debt grows, you may take more advances which further diminish profitability and flexibility.
If cash flow fails and you cannot keep up with deductions, you may default; the lender may file a judgment or UCC lien.
In some MCA contracts there are confession-of-judgment clauses or other aggressive terms.
Stacking gives other lenders the impression you are over-leveraged, which may block access to bank loans, SBA financing or better terms.
Violations of underlying loan agreements (for example if you accepted a business loan that restricted new debt) can accelerate your obligations.
MCA industry remains lightly regulated; many terms are not clearly structured as loans though courts sometimes treat them as such.
If you stack without fully realizing the implications, you expose your business to predatory practices.
It’s helpful to imagine how stacking multiple merchant cash advances affects actual businesses.
A small retail shop takes a $20,000 MCA, and a month later takes an additional $10,000 from another lender. Each has daily hold-backs of $300 and $200 respectively. The total deduction becomes $500/day. During slow months, the owner struggles to pay vendors, covers payroll by tapping reserves, and ultimately defaults on one of the advances. They lose inventory, are sued, and end up with liens on their bank account. This is exactly the type of case described in industry blogs.
A restaurant in the off-season borrows one MCA to cover renovation. They later stack another to fund holiday staffing. The combined repayments leave them little margin when holiday sales dip. They cannot invest for their peak season or replenish working capital. They end up refinancing another MCA just to keep current, edging closer to collapse. These stories align with commentary on debt trap cycles.
If you’re considering an MCA—or already have one and are tempted to stack—take these practical steps.
Map out your daily/weekly sales projections.
Calculate how much you can realistically afford to pay out each period while still operating.
Ask: If sales drop by 20 % or 30 %, can I still manage the repayments?
Consider alternatives: traditional bank loans, lines of credit, equipment leasing, SBA micro-loans.
Compare factor rates, hold-back percentages, and effective APR of MCAs.
Choose the option that matches your business model and risk tolerance.
Avoid taking a second one unless you can fully justify how you will repay both without stacking.
Check contracts for anti-stacking clauses—some lenders refuse to provide advances when you have existing MCAs.
Explore consolidation: one advance that pays off existing ones and gives one payment instead of many.
Look for clauses about daily/weekly withdrawals, confession of judgment, personal guarantees. Understand what happens if your business revenue slows.
If you don’t understand terms, consult a business attorney.
Use advance only for revenue-generating activities—not simply to patch current operational shortfalls.
Maintain reserves and avoid pushing all cash toward repaying the advance.
Monitor regularly: track repayments, revenue dips, and cash flow stress signals.
Here are quick answers to common user queries about stacking multiple merchant cash advances.
Yes, you can legally, but the practice may violate contract terms of existing funding or worsen your risk of default.
In very limited cases—if you’ve fully paid off the first advance, or if the second advance is strictly for growth and has a clear ROI—it may be workable. But stacking simultaneously rarely benefits the business.
Daily or weekly repayments exceed a safe percentage of your revenue.
You are relying on new advances just to keep current on old ones.
Cash reserves are drained.
You are unable to make strategic investments because all cash goes to repayments.
You might face aggressive collections: bank account sweeps, liens, judgments, and personal guarantee enforcement. Your business credit will be hurt.
Stacking multiple merchant cash advances is a high-risk strategy that often leads to cash-flow collapse, debt traps, and legal consequences. By understanding the fundamental mechanics of MCAs, scrutinizing your cash flow, comparing alternatives, and avoiding overlapping repayment obligations, you can protect your business.
Take action now:
Step 1: Review all existing advance agreements and list daily/weekly repayment obligations.
Step 2: Run a worst-case cash-flow scenario (e.g., 30 % dip in sales) and check if you can still operate.
Step 3: If you’re considering another advance, contact a funding advisor or business attorney to review options and explore alternatives like consolidation.
Don’t let quick cash turn into a long-term bind. Equip yourself with knowledge, build a sustainable plan, and move forward with confidence.
In this post, we unpacked the term stacking multiple merchant cash advances, explained how it works, highlighted six major risks (cash-flow strain, higher costs, debt traps, default/legal exposure, financing restriction, regulatory issues), provided real-world scenarios, offered a practical how-to avoid guide, answered FAQs, and pointed to internal resources. The key takeaway: avoid stacking unless fully justified and manageable.
Your next step: If you are facing cash-flow pressure or reviewing an MCA, pause, evaluate, and create a funding strategy that prioritizes business longevity over short-term fixes.