What is stacking merchant cash advances? Businesses that take multiple short term cash advances are stacking cash advances. Loan stacking may be hurting your cash flow. Save your business now with several choices to get out of advances, pay them down, or pay them off. Apply below.
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FAQ Frequently asked questions about stacking merchant cash advances
What is stacking merchant cash advances?
Stacking is a term used in the mca merchant cash advance industry when a business has more than 1 merchant cash advance at the same time. Businesses sometimes need a 2nd position merchant cash advance or even a 3rd position mca merchant cash advance.
Can you take out an advance or loan if you already have one?
You can can take out more advances loans if you already have one. If your business has the cash flow to afford more loans then you should be able to get another approval.
Can I get a loan from two different places?
Your business can get a loan from two different places. You will be approved if you meet each lenders requirements. As a result, talk to each lender about your business and how much money it needs.
I have several merchant cash advances. How to I get rid of them?
There are several solutions businesses can take to get out of the problem of multiple cash advances. They can get a monthly payment loan to pay them all off. Another way is to use other funding programs such as accounts receivables. Accounts receivables financing allows you to pay off the advances without even having another loan. In addition, it allows your business to improve it’s cash flow by getting paid sooner on the money it is waiting to collect.
How can my business be approved for a consolidation?
Contact lenders that specialize in consolidating merchant cash advances. They should be able to give you criteria over the phone. If you and the lender agree you have a strong chance of qualifying, consider applying for the consolidation.
Get a consolidation loan to payoff the advances
Through a consolidation loan for instance, the daily debit payment is lowered and term extended.
How can my business be approved for a consolidation? Contact lenders that specialize in consolidating merchant cash advances. They should be able to give you criteria over the phone. If you and the lender agree you have a strong chance of qualifying, consider applying for the consolidation.
Example of too many stacked cash advances:
A company obtains a first position Merchant Cash Advance, then a 2nd Merchant Cash Advance after the 1st one. The second (2nd) Cash advance is stacked on top of the first (1st) merchant cash advance. Then they get a third (3rd) Merchant Cash Advance. The third (3rd) Merchant Cash Advance is stacked on top of the first (1st) and second (2nd) Merchant Cash advance.
The company’s cash flow is too restricted because it may not be able to pay other critical business expenses. For instance, the business may not be able to pay for advertising, product development and expansion plans it has.
Below is an example of how consolidating stacked merchant cash advances works. The required multiple daily payments that are now being debited from your business checking account take away from critical marketing, inventory, and even being able to meet payroll. As a result, how can your business solve cash flow problems from stacking merchant cash advances?
Acme, Inc. has 2 merchant cash advances.
Cash Advance # 1 current balance $10,000 @ $100 per day.
Cash Advance # 2 current balance $10,000 @ $100 per day
This merchant has 100 days left paying on these 2 advances. They are paying $1,000 per week and about $4,000 per month. On a typical consolidation, they will lower their payment by about 50%, thereby lowering their daily payment from $200 to $100. This lowers their monthly repayment from $4,000 to $2,000 and saves them $2,000 per month. Sometimes the savings is even more.
Negotiate with cash advance companies to lower the daily payments
How do you negotiate with cash advance companies to lower the daily payments?
Each cash advance company may have a different policy on negotiating to lower your daily payment. The Lender will consider your specific situation, and how the request is handled by the borrower.
Review the basic terms of each current advance because the cash advance company has stipulations in the contract you may violate. The stipulations may say the borrower cannot obtain another cash advance until the contract is paid off. This is an example of how you may have already violated the terms of the contract. As a result, the lender may have the option of declaring a default. For instance, they may require or demand full payment of the remaining balance immediately. So review the contract carefully before contacting the cash advance company.
Ask for a lower daily payment
Your business can contact the cash advance company and let them know you cannot handle the daily payment. You need to have the daily payment lowered for your business to be able to continue making the payment. You will be asked some questions and may have to complete paperwork. Ask for a pause or break in the payments
Ask for a pause in payments
If your business is only going through a short term slow period in business, it may be better to ask for a pause in the payments for a week or two. Funders are less restrictive on pausing payments than they are on lowering the daily payments.
Pay off the cash advances with other loans
If the problem of stacking merchant cash advances cannot be solved through a consolidation or negotiation with the lender, another solution is to pay them off because that will fully solve your problem. For example, some other types of loans are:
– Asset based loan. This can be based on Real Estate, Equipment, or both.
– Accounts receivables financing.
You can use the proceeds from one of these other loans to payoff the short term merchant cash advances. You may be able to extend the term to several years, which can dramatically lower your monthly payments.
Using these strategies and tips are the best ways to lower your daily merchant cash advance payments.
The SBA has tips, suggestions and hints at finding solutions to cash flow problems as well as how to create business plans and other business statements that may be requested for any type of financing transaction.