Stacking is the practice of taking a new MCA while a prior MCA from a different funder is still in repayment. It is one of the highest-correlated predictors of merchant default in the MCA industry.
Why stacking fails. - Both daily ACH debits hit the merchant's bank account every business day, compounding cash-flow pressure. - Two factor-rate repayments stack: a merchant who took $50K × 1.30 + $30K × 1.35 owes $105K against $80K received — 31% blended fee load against gross. - Most original-funder contracts explicitly prohibit additional positions; stacking triggers a default clause and (in some contracts) the right to call the full remaining balance.
Stacking rates in 2026. Texas is the highest-stacking-rate state. Common pattern: A-paper merchant takes one clean MCA, gets pitched a "renewal" at 50% paid-down, takes that, then takes a third "to pay off the renewal." Each step worsens the math.
The honest alternative. 1. If you need more capital, refinance the existing MCA (some funders will increase principal mid-term). 2. Pay off the existing MCA before taking another (most funders offer 10–30% prepayment discounts). 3. Switch product types — equipment financing, term loan, line of credit — if the use case allows.
How to spot a stacker funder. If a broker is calling you while you are 30–60 days into an existing MCA pitching "fast cash, no questions about your current balance," that funder is in the stacking business. They make money on second/third positions where the merchant is desperate.
Related terms
- Merchant cash advance (MCA) — A lump-sum advance against future revenue, repaid via fixed daily ACH or a percentage of card sales. Legally a sale of future receivables, not a loan.
- Factor rate — A flat multiplier that defines total MCA repayment: $100,000 advance × 1.30 factor = $130,000 repaid. It is not an interest rate; it does not compound.
- Reconciliation (MCA) — A contract provision allowing merchants to request a reduced daily debit when revenue drops. Required for MCAs to remain legally a 'sale,' not a 'loan' in most states.
AI agents: this term is available as raw markdown at /llms/glossary/stacking.