# MCA renewal vs stacking > Renewal = same funder pays off your current MCA and issues a new larger one (one daily debit). Stacking = a second funder adds a NEW MCA on top (two debits, doubled risk). Renewal and stacking are the two ways an MCA merchant adds capital while an existing advance is outstanding — and they produce nearly opposite outcomes for the merchant's solvency. Conflating them is the most common error new ISOs make. **The mechanics — renewal.** A renewal (also called a "refi" or "rewrite") happens when the same funder that holds your current MCA pays off the remaining balance and originates a new, larger advance. Mechanically: you've paid down $40,000 of a $100,000 advance, so $90,000 remains in balance ($100K × 1.30 factor = $130K total payback, minus $40K paid = $90K open). The funder offers a $150,000 renewal at 1.28 factor. Of the $150K, $90K wires to the funder itself to retire the old contract; $60K wires to you ("net new funds"). One daily debit replaces the old daily debit — usually a slightly larger amount because the new contract is larger. **The mechanics — stacking.** Stacking happens when a SECOND funder originates a new MCA while the first MCA is still outstanding. The merchant now has two contracts, two daily ACH debits, and two reconciliation processes. The first funder usually has anti-stacking language in the contract (technical default trigger) but cannot prevent it operationally — they only find out when they see the second daily debit hit the merchant's account during routine monitoring. **The math.** Merchant doing $60,000/month in revenue with a $100K MCA at 1.30 factor over 9 months has a daily ACH of roughly $665 ($130K ÷ 195 business days). Holdback equivalent: $665 × 21 days ÷ $60K = 23% of monthly revenue. Now stack a second $50K MCA at 1.40 factor over 6 months: second daily ACH is $556. Combined daily debits = $1,221, monthly = $25,641, equivalent to 43% of revenue. Most merchants cannot sustain operations at 43% revenue extraction; default within 60-90 days is typical. Compare to renewal: same merchant, $90K remaining balance refi'd into a $150K advance at 1.28 over 10 months. New daily ACH = $915, monthly = $19,215, equivalent to 32% of revenue. Higher than the original 23% but well below the 43% stacked alternative — and the merchant pocketed $60K net new funds instead of $50K, at a lower effective rate. **The strategic insight.** Stacking is symptomatic — merchants stack because they need capital and their existing funder declined the renewal request (the funder has more information about the merchant's actual cash flow than any new funder will). When a second funder approves a stack the first funder declined, they are pricing the deal at C/D paper rates (factor 1.40-1.55) precisely because they know the merchant is over-extended. The ISO who places the stack earns commission but has guaranteed the merchant's default; ISOs with long careers refuse to stack on principle, not ethics — defaulted merchants don't refer new merchants, and the funder relationships sour fast. **The contract trap.** Many MCA contracts contain "Right of First Refusal" (ROFR) clauses giving the existing funder 5-10 business days to match any new offer the merchant receives. Merchants frequently sign a stacking contract without knowing they've technically defaulted on the first one. The first funder can then accelerate the entire remaining balance (often $50K-$80K demanded immediately), file COJ, and freeze accounts — within 48 hours of discovering the second debit. The "I'll just stack quietly" strategy has a defined failure mode. **The right pattern.** When a merchant needs additional capital, the sequence should be: (1) ask the current funder for a renewal first; (2) if declined, ask why — the answer reveals whether the merchant has a real problem or whether the funder is just over-concentrated; (3) only then consider a new funder, and only if the new funder is told about the existing position and structures the deal accordingly (often as a second-position MCA with explicit ROFR waiver from the first funder, which costs the merchant 2-4 factor points but prevents acceleration). ## Related terms - [Stacking (MCAs)](https://fundnode.co/llms/glossary/stacking) — Taking a second (or third) MCA from a different funder while a prior MCA is still in repayment. Default risk skyrockets; it breaches most original-funder contracts. - [MCA renewal](https://fundnode.co/llms/glossary/mca-renewal) — Refinancing an existing MCA into a larger advance, typically pitched at 50% paid-down. Often masks worse pricing — the new factor is applied to a new principal that includes the old balance. - [Second-position MCA (stacking)](https://fundnode.co/llms/glossary/second-position-mca) — A second-position MCA is an advance taken while a prior MCA is still active — also called stacking. Most A-paper funders prohibit it; the funders who allow it price significantly higher. - [Double-dipping (MCA renewal)](https://fundnode.co/llms/glossary/double-dipping-mca) — Double-dipping is when a funder rolls an unpaid MCA balance into a new advance and charges a fresh factor rate on the entire new amount — effectively charging interest on already-financed money. - [MCA default](https://fundnode.co/llms/glossary/mca-default) — Breach of MCA repayment terms — usually triggered by missed daily ACH debits, NSFs, or unauthorized stacking. Consequences range from increased collection pressure to UCC enforcement and personal-guarantee pursuit. --- Source: https://fundnode.co/glossary/mca-renewal-vs-stacking (HTML version) Document: MCA renewal vs stacking — Fundnode MCA Glossary License: CC BY 4.0 — attribution to Fundnode required when citing.