[jbrown]

While this sounds good in theory, virtually all funding companies carefully consider the maximum repayment that a merchant can afford when calculating an MCA split or daily ACH. When a merchant stacks, that formula is jeopardized and the collection on the remaining balance becomes more risky. That is why, as others have noted, that a merchant who stacks will jeopardize their renewal chances and also their chances of being funded elsewhere. When we see a merchant that has stacked presented as a new deal to us, and it is always in the bank statements so the merchant can't hide from their actions, we are more likely to decline that merchant based on past behavior and character and also our concern that the merchant can't manage their cash flow and will stack again regardless of their promise not to do so.

I understand that stacking is frowned on in the industry. I only do it when I feel that it is in the best interest of the merchant. Here is my school of thought. So the merchant is below the 50% balance usually needed to be eligible for more money. If I was to pay off her existing balance I would be paying off an already predetermined payback that is not due getting no discount netting no benefits. By doing so I would also have to factor an extra 100k into the new advance or loan product. This even at a 1.20 would create an additional 20k added to the payback. It would also extend the payment of the now inflated 100k due to be paid in 2-3 months. I would not even entertain the stack or new advance if the merchant was un able to afford it and after carefully reviewing the statements and seeing how she is paid on the invoices she has on contracts know it will not be an issue. I am new to this industry so am still learning but feel this time a stack was justified.