Multiple Merchant Cash Advances: MCA Stacking Help

Key Takeaways

• Multiple merchant cash advances can create serious cash flow problems because each MCA may withdraw payments from the same business revenue.
• Taking another MCA to cover existing MCA payments can increase the total daily or weekly withdrawal burden instead of solving the underlying problem.
• Businesses with stacked MCAs may have options including restructuring, refinancing, or negotiating settlements depending on their financial situation and MCA agreements.
• Looking at all outstanding merchant cash advances together can provide a clearer picture of the business's actual cash flow and available options.

It rarely starts as a plan to take on three merchant cash advances at once. It usually starts with one advance, a rough month, and a second advance that looks like the fastest way to bridge the gap.

This is commonly called MCA stacking, and multiple merchant cash advances can quickly put pressure on a business's cash flow when several daily or weekly withdrawals are coming from the same revenue.

Why MCA Stacking Can Hurt Cash Flow So Quickly

Each merchant cash advance may take its own daily or weekly payment from business revenue. When two or three advances are active at the same time, that can mean multiple separate withdrawals hitting the same business bank account.

Those payments are not necessarily divided between the MCA funders. Each agreement generally has its own payment terms, which means a business can remain current on several advances while still watching its usable cash flow shrink.

The problem becomes especially serious when MCA payments begin competing with payroll, rent, taxes, inventory, utilities, and other essential business expenses.

The Trap of Taking Another MCA to Pay Existing Advances

When cash gets tight, another merchant cash advance can look like immediate relief. MCA funding can sometimes move quickly, which may make another advance seem like an easy way to cover this week's shortfall.

But taking another advance may also add another daily or weekly payment to the withdrawals already putting pressure on the business.

That can create a cycle where new financing is being used to keep up with previous financing rather than supporting the underlying operations of the business.

What to Look at When You Have Multiple Merchant Cash Advances

If your business is carrying multiple MCAs, it can be helpful to look at the entire situation rather than evaluating each advance separately.

• The total daily or weekly MCA payments. Add together the payments from every active advance to understand how much revenue is leaving the business each week.
• The remaining balances. Review what is still owed on each MCA and the estimated remaining payment period.
• Personal guarantees. Determine which agreements include personal guarantees and review how those guarantees are written.
• UCC filings. Identify whether MCA funders have filed UCC financing statements involving business assets or receivables.
• The business's actual operating cash flow. Compare MCA payments with payroll, rent, taxes, inventory, and other essential expenses.
• Whether restructuring or settlement may make more sense. Depending on the situation, addressing existing MCA obligations may be more sustainable than taking another advance.

Can Multiple Merchant Cash Advances Be Settled or Restructured?

In some situations, businesses carrying multiple merchant cash advances may be able to negotiate payment changes, restructure obligations, refinance into another form of financing, or negotiate settlements for reduced amounts.

The available options depend on factors such as the MCA funders involved, outstanding balances, payment history, business cash flow, personal guarantees, UCC filings, and the terms of each agreement.

For more information about settlement, see MCA Debt Settlement.

What If You Can't Keep Up With Multiple MCA Payments?

If multiple MCA withdrawals are making it difficult to cover essential business expenses, taking another advance is not the only possible option.

Before adding another payment to the business's existing obligations, it may be worth reviewing all of the advances together and determining whether restructuring, refinancing, or settlement could provide a more sustainable path forward.

If payments have already started failing, see What Happens If You Can't Pay a Merchant Cash Advance?.

For a broader overview of available options, see Merchant Cash Advance Debt Help

MCA Debt Settlement

What Happens If You Can't Pay a Merchant Cash Advance?

Merchant Cash Advance Lawsuit in Texas

Juggling more than one merchant cash advance?

Learn About Your MCA Debt Relief Options

Or call 800-971-4060 and talk to a Debt Specialist.

This is general information, not legal advice. Debt Redemption is not a law firm and does not give legal advice. Merchant cash advance agreements, collection practices, settlement options, and legal rights vary based on the agreement and circumstances. If you're facing a lawsuit, threatened litigation, or questions about your legal rights, talk to a licensed attorney about your specific situation.