Loan Stacking: How Many Loans Can My Business Have?

While not necessarily advisable, the practice of ‘loan stacking’ can be a common avenue for small and medium-sized businesses – particularly those that are distressed or facing cash flow problems.


Below we will take a look at the potential risks of loan stacking, review how many loans a business can actually have at once, and discuss the debt relief and modification solutions National Credit Partners offers for every type of small or medium-sized business in need


What is Loan Stacking?


Loan stacking is a term used to refer to when a borrower has multiple loans or cash advances outstanding at the same time. However, the term is most often used to describe the scenario where borrowers will actively apply for and receive approval on multiple short-term business loans or merchant cash advances in sequence. Often, each loan or cash advance will have similar characteristics – in terms of repayment terms and interest rates. 


When such a scenario occurs, your small business is not actually refinancing one loan/cash advance with another. Rather, the small business is taking out multiple loans and/or cash advances at once (which is how the term ‘stacking’ becomes apt) and the potential to repay said loans/cash advances can be diminished as a result of the sheer number involved.


When a small business borrower has multiple loan payments actively due, it’s not uncommon to default on one or more. Moreover, having simultaneous loans or cash advances can actually negatively impact a borrower’s ability to then afford the principal payments. Furthermore, in a scenario where a small business borrower defaults on one or more ‘stacked’ loans/cash advances, multiple creditors can automatically make it difficult for each lender to secure their repayment.


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How Does Loan Stacking Occur?


Loan stacking can occur intentionally – where a small business makes dedicated efforts to secure multiple financing streams (whether loans, cash advances, etc.). But loan stacking can also occur as a result of aggressive or predatory lending.


For example, when a small business takes out a loan (let’s say $100,000 for our purposes), a UCC lien is typically filed with the secretary of state where the business is located. A UCC lien is a claim against a business’s assets under the U.S. Commercial Code. When a UCC lien is filed it essentially provides the world with information related to your small business’s existing debt (in this case $100,000).


Once that information is made public, another lender may see the filing and decide to reach out to see if you need “additional financing” for your small business. While they will likely not match the initial $100,000, they may offer 10-20% of that figure as an option to help you reach “your financial goals.”


This is a common scenario that leads to loan stacking – lenders see that a small business has existing debt and rush to see if they can entice the decision makers into taking out an additional loan or cash advance. When multiple offers are agreed to, loan stacking occurs. This can add increasing risk to both the small business and the original lender by adding increasing debt that simply can’t be repaid based on a company’s performance and individual ability to repay the stacked loans or cash advances.


How Many Loans Can a Business Have at Once?


In theory, a small business can take out limitless loans or cash advances, provided they are able to find a lender. But that absolutely doesn’t mean that a business should take out more loans than it needs or can repay.


When it comes to SBA loans, there’s no limit on the number a company can secure, provided all loans remain in compliance with SBA guidelines. Small businesses have been known to take our five or more SBA loans over the course of several years.


What Are the Possible Negative Effects of Loan Stacking


Loan stacking can have multiple negative impacts on a small or medium-sized business. Some of the more common effects include:

  • Negatively impacting credit score
  • Impact ability to make repayments
  • Adversely impact cash flow


What is Debt Financing and How Does it Work?


Debt financing is commonly defined as the process of borrowing funds from a lender or creditor in an effort to secure business capital. As the borrower, you would be required to repay the sum in regular monthly installments (typically with interest). Such financing can be utilized by small and medium-sized businesses alike for a variety of purposes and at various stages of company growth and development. 


In terms of how debt financing works, it involves funds being borrowed from a lender with a specific payback period. Said rates and terms vary on a case-by-case basis. 


How Can I Secure Debt Relief or Modification Solutions for My Business?


If your business is distressed and requires immediate short and long-term debt relief or modification solutions, National Credit Partners is here to help get you back on track the right way. 


At National Credit Partners, we help small businesses like yours identify debt relief and debt modification solutions as soon as possible. If you’re struggling to obtain traditional financing, we can identify customized options created specifically to your small business’s needs which allow for immediate cash flow, but also get your company on the path towards traditional financing approval in the near future. 


Unlike most other debt relief companies, National Credit Partners offers two critical advantages that can help your business improve its financial condition for the long-term:

• We strive to ensure that all advances are shown as ‘paid in full’ rather than ‘settled for less’ – assuring your business remains in good standing with lenders and qualifies for future financing.

• We provide every client with both debt restructuring and legal representation

We’ve successfully helped small businesses facing significant financial challenges – including defaults, collections, and legal actions – achieve permanent debt relief solutions. In fact, many of our distressed business clients were able to qualify for traditional financing (like SBA or term loans) after graduating our program. 


With our years of experience and proven results, the National Credit Partners team of dedicated professionals is here to help your business find a debt relief solution that is tailored to directly meet your needs, challenges, and future goals.


Call us today at 949-868-1054 or fill out the contact form below to arrange for a free and no obligation consultation with one of our skilled team members. We’ll review your company’s specific circumstances thoroughly and discreetly and utilize our decades of experience and proven results to help you achieve your financial goals. 


Don’t settle for an unproven debt relief professional that could potentially make your business’s situation worse through inexperience. Choose National Credit Partners, the company offering direct, strong, and proven relationships established with countless creditors. We’ve helped companies achieve the financial solutions they need to make fresh starts, and can do the same for your business by identifying the personalized debt relief option that is right for you. 


Complete the form below and one of our team members will reach out to you immediately.  

If you are one of the many thousands of companies struggling with high interest business loans, call us today for a free consultation. Just taking the first step in talking to an expert can start relieving stress. And once you talk to a debt help specialist, you will see that there is hope.

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