Glossary
What is loan stacking?
Why stacking is a primary default driver
Each MCA funder typically sees only its own position. A merchant taking a third or fourth simultaneous advance may appear fundable based on historical bank statements — but the new obligation, stacked on top of existing daily remittances, pushes total cash outflow beyond what the business can sustain. The result is a default cascade: the merchant stops paying all funders simultaneously.
Stacking detection is therefore a pre-funding problem, not a collections problem. Once a merchant is in a stacked position and defaulting, recovery options for all funders are reduced.
How funders detect stacking
The most reliable pre-funding stacking detection combines: recent bank statement analysis (looking for daily ACH debits matching known funder descriptors), UCC-1 lien searches against the merchant's EIN (funders who file UCCs create a searchable record), and commercial data bureau lookups for reported advance positions. No single source is comprehensive — a layered approach is standard practice.
FAQ
Loan Stacking — common questions
Is loan stacking illegal?
Stacking itself is generally not illegal, but most MCA agreements contractually prohibit it — making stacking a breach of agreement and an event of default. Misrepresenting existing advances on an application can constitute fraud. Lenders should consult counsel on the legal remedies available in their specific agreements and jurisdictions.
How quickly can stacking positions develop?
Very quickly. A merchant can obtain a new advance within days of funding. Checking for stacking as close to the funding date as possible — ideally within 24 to 48 hours — reduces the window during which new positions can appear between underwriting and funding.
The institution around the intelligence
See Hadrian run your case lifecycle — intake to close, every decision audited.
Governance-native case processing for lenders and regulated teams.