[FutureISO]

Can everyone give their 2 cents about what the true definition of stacking? Thank you

[CO1]

Additional Funding obligations (stacking) Often if a customer is brought to an MCA by a Cash Broker (a sales agent who receives a commission for the sale and nothing else) there is a possibility that the merchant is being shopped around, similar to the mortgage brokers when they are trying to find the best interest rates. The concern with this practice is that if a merchant only receives a portion of the amount of cash that he needs he may be tempted to accept more than one offer. Or, he may accept one offer and then apply for additional advances. This is known as “stacking” cash advances. As these advances are paid off via a percentage of all the credit card transactions, a merchant with more than one advance being paid off at the same time could potentially deplete his cash flow. If there is a default on the agreement, the advance company that has first rights or a UCC filed, will probably be the only MCA able to collect. It is prudent for the underwriting departments of cash MCAs to research the merchant to avoid “stacking.” One such way would be very similar to the ACQ inquiries on the credit reports for merchant processing accounts. If an underwriter notices a cash advance company listed on the merchant’s credit bureau inquiry (seen as an “MCA” suffix behind the company name in the inquiry section), the merchant should be further investigated. Several of the cash advance companies will “pay off” a merchant’s existing cash advance with another company in order to eliminate the possibility of stacking. It should also be clearly defined in your agreement that your customer may only have one advance at a time.

[cashguy]

Where did you get this it's all cc related

[CO1]

I call it the Cash Advance-MCA- Constitution.

[CO1]

https://www.google.com/url?sa=t&sour...VLZZ6XbmpikGxQ

[funding pro]

Anytime a business has more than one open "short term, revenue based financing product" that is not secured by a piece of collateral but is calculated based on their revenue, they have stacked.

Whether it is on their own accord or by means of a broker does not matter. Whether they have been lied to or have not doesn't matter. Typically this will resemble a longer term advance (6 to 18 months) coupled with one or many extremely short term advances (2 weeks - 6 months).

What some would consider "revenue based short term financing products" are different depending on who you speak with, but I for one consider them to include both processing based advances and any advance that has a fixed or adjustable daily/weekly remittance of less than 24 months.

[AndyYSCISOdept]

I have found that sometimes when a merchant has a LONGER term MCA or ACH product (above 12 Months) that there is a legitimate need/use for a short term product on the side. If the underwriting is done carefully and respects the other balance you can avoid any damage to the first position product. I would like to believe that was the idea behind "stacking" originally"

[funding pro]

I have found that sometimes when a merchant has a LONGER term MCA or ACH product (above 12 Months) that there is a legitimate need/use for a short term product on the side. If the underwriting is done carefully and respects the other balance you can avoid any damage to the first position product. I would like to believe that was the idea behind "stacking" originally"

I don't completely disagree with you, the problem we are going to see is that it is not yours or my opinion on it that matters. It is a matter of what the first position funding company does. If Company A thinks a business can handle 12% of their gross revenue to repay an advance and Company B thinks 16% can be used. But if the reality was they could only handle 12% and the merchant goes out of business shortly after taking that second advance, do you think Company B isn't in the wrong? Does Company A have the right to sue Company B?

[MCNetwork]

A stack (or grasshopper) is when a merchant takes an additional merchant cash advance without paying off the existing balance from the current lender. Thus, the current lender is being "stacked" on.

[Finance1]

This subject has been kicked around for quite a while now. I don't think anyone would argue that it isn't a "bad" practice as a whole. But their are exceptions where a client can truly afford it, doesn't increase the risk of higher position funders, and is a win win. But is this the norm?

Stacking was born out of the simple market principal of supply and demand. Too many applications were getting denied for having an advance or loan that couldn't be paid off with new funding. Those were dead deals for years until recently. It started with just a few funding companies but others jumped in left and right to fill the demand and compete with those already doing it. It's prolific now and here to stay until a force greater than ethics and sound business practices makes it stop.

[Ryan Shiroky]

Anytime a business has more than one open "short term, revenue based financing product" that is not secured by a piece of collateral but is calculated based on their revenue, they have stacked.

Whether it is on their own accord or by means of a broker does not matter. Whether they have been lied to or have not doesn't matter. Typically this will resemble a longer term advance (6 to 18 months) coupled with one or many extremely short term advances (2 weeks - 6 months).

What some would consider "revenue based short term financing products" are different depending on who you speak with, but I for one consider them to include both processing based advances and any advance that has a fixed or adjustable daily/weekly remittance of less than 24 months.

what about WBL, who collateralizes their loans? They make it look like a mortgage, but its really an advance with a daily debit...

[Sean Cash]

A stack (or grasshopper) is when a merchant takes an additional merchant cash advance without paying off the existing balance from the current lender. Thus, the current lender is being "stacked" on.

I thought a grasshopper was the act of a deal getting multiple stacks in a short time period by a single broker. The deal gets grasshoppered and the broker responsible is the hopper (which has a nice double meaning with hoppers from the TV show The Wire).

[MCNetwork]

I guess that depends on whether or not the word "stacker" is used as a noun (to describe the second advance itself) or a verb (to describe the person brokering the second advance)