Stacking, Explained Honestly for Brokers

Leg 01What stacking actually means

Stacking is when a merchant takes a new merchant cash advance while one or more existing advances are still being remitted. Each funder has purchased a portion of the merchant's future receivables, and each takes its remittance from the same account. The new position is often called a second, third or later position, in order of when it was funded.

Stacking is different from a renewal with the same funder, where the existing balance is typically settled from the new funding, and from a consolidation, where a new funder pays off one or more existing positions. In a true stack, all the positions keep running at the same time.

Leg 02The risk to the merchant, in plain numbers

Consider a hypothetical café with true monthly revenue around $45,000. Its first position takes about $250 per business day, roughly $5,500 a month. Tight but workable. A second position adds another $300 per day. Now around $12,000 a month, more than a quarter of revenue, leaves the account before rent, payroll, suppliers or the owner's pay.

Each additional position also usually carries a higher cost than the last, because each new funder is behind the others and takes more risk. A third or fourth position can mean that a large share of every sale is already committed. If revenue dips even modestly, payments start to bounce, fees pile up, and the merchant faces a crisis that a smaller, slower decision might have avoided.

The question is never whether you can find a funder. It is whether the business can carry what you find.

Leg 03How funders tend to view it

Funders vary widely. Some will only fund first positions. Some will consider a second position when cash flow clearly supports it. Some specialise in later positions and price accordingly. Many funding agreements include terms restricting the merchant from taking additional financing without consent, and existing funders may react if they see a new position appear.

Because of all that, never assume. Read each lender's current guidelines and agreements, and send files only to funders whose criteria the stack genuinely fits. Lender matching in FundPilot scores each file against each lender's stated guidelines, including position limits you record, so you are not guessing who might accept a second or third position.

• Some funders decline any file with an existing position
• Others set limits on how many positions or how much total burden they accept
• Existing agreements may restrict additional financing; the merchant should review theirs
• Undisclosed positions found later can lead to declines or serious disputes

Leg 04A responsible approach, step by step

You do not need a policy manual to handle stacking requests well. You need a consistent routine that puts the merchant's ability to carry the payments ahead of the commission.

1. Identify every existing position from the statements and confirm each with the merchant.
2. Calculate the total current remittance as a share of true monthly revenue.
3. Add the proposed new remittance and look at the combined share honestly.
4. Ask what the funds are for and whether that need would actually be solved by the amount.
5. Explain to the merchant, in writing, the combined daily or weekly payments they would be carrying.
6. Encourage the merchant to review their existing agreements, and to seek independent advice if unsure.
7. Submit only to funders whose guidelines fit, with every position disclosed.

Leg 05When the right answer is no, or not yet

Sometimes the numbers say the business cannot safely carry another position. In that case the most valuable thing you can do is tell the merchant. Explain what you see, show them the combined burden, and talk through alternatives: waiting until an existing position finishes, asking whether a consolidation offer would genuinely lower their payments, or addressing the underlying cash problem another way.

Merchants remember who was straight with them. A broker who turned down a risky stack in spring is often the first call in autumn when the first position is paid off and the business is ready for a sensible renewal.

Leg 06Keeping the record straight

Write down what you advised and why. Note every position you found, the combined burden you calculated, and what the merchant said when you discussed it. If a dispute ever arises, a clear record of disclosure and advice protects everyone involved.

FundPilot keeps statement analysis, call transcripts, notes and lender replies together on the deal, with a full audit trail of changes, so that record builds itself as you work rather than relying on memory. Managers can review stacking deals before they go out, which is a sensible control for any floor that wants these decisions made carefully.