Why stacking is the thing that ends businesses
A single advance is expensive. Stacked advances are structurally different, and the difference is arithmetic rather than opinion.
Each position takes a fixed cut of every deposit, every business day, ahead of payroll and ahead of your suppliers. Add a second and a third and the combined daily payments can exceed what you make on the work — at which point the business is working to service the advances and nothing else. Revenue keeps rising and cash keeps falling, which is why owners in this position so often describe it as not making sense.
This is also what closes the door on cheap capital. An SBA lender looking at daily debits sees a business that cannot service a monthly note. The advances have to be gone before a 7(a) is realistic — which means the refinance isn’t just relief, it is the prerequisite.
How to tell what you actually have
Advances are frequently sold as “loans.” These are the tells.
- Daily or weekly ACH debitsThe single defining feature. A loan bills monthly; an advance takes a cut of every deposit.
- Two or more positionsStacking is where advances go from expensive to fatal. Each new advance takes its cut before the last one is paid off.
- A factor rate, not an APR"1.35 factor" is what you pay back in total, not a rate. Paid off over six months it can cost you more than 80% a year.
- Payments that scale with revenueA good month costs you more. There is no reward for growing.
- A COJ or personal guarantee you don't remember signingConfessions of judgment and cross-collateralization are common and are the reason these are hard to walk away from.
What the paper actually costs
Real factor rates and payment schedules, quoted on live files, put on a yearly rate on the same basis a bank loan is. Refinanced into non-bank senior at 11.5% — the most expensive exit we place, so the saving shown is a floor rather than a best case.
| As quoted | Annualised | Refinanced at 11.5% | Cheaper by |
|---|---|---|---|
| 1.30 over 60 weekly | 46.3% | 11.5% | 75% |
| 1.33 over 52 weekly | 59.1% | 11.5% | 80% |
| 1.36 over 257 daily | 64.8% | 11.5% | 82% |
| 1.32 over 140 daily | 115.5% | 11.5% | 90% |
Your own numbers, priced the same way: the capital stack calculator. Annualising a factor solves for the rate at which level payments discount to the advance — the same arithmetic a lender runs, and the reason a 1.36 on a daily remit is not “36%”.
Four ways out
Which one fits depends on what you have to underwrite against — not on how badly you need it.
Consolidation term loan
One loan pays off every advance you have and replaces the daily debits with a single monthly payment. Longer to pay back, far less cash leaving the account each day.
Profitable, some collateral, at least a year of history
Invoice factoring
If you invoice commercial or government customers, a factor advances against those receivables and pays off the advances. Underwrites your customer's credit rather than your profitability — which is why it works when nothing else does.
Commercial A/R on 30–90 day terms
Contract financing
Funded against a signed contract or purchase order. Works for contractors and staffing firms whose money is committed but not yet collected.
Signed award from a creditworthy counterparty
Equipment refinance
If you own titled equipment free and clear, a sale-leaseback or refinance releases cash to clear the advances.
Owned, titled, unencumbered equipment
What we’ll tell you honestly
- Refinancing is not free. A consolidation still costs money. It is cheaper than what you have, and it stops the daily bleed — but anyone promising to make the debt disappear is selling something.
- Some files can’t be refinanced. If the combined balance exceeds what the business can service on any structure, the answer is a workout conversation, not another facility. We will say so.
- We will not add a position. If the only thing that fits is another advance, we decline the file rather than stack you.
- Read your agreements before you sign anything new. Confessions of judgment, cross-collateralization and reconciliation clauses all affect what a refinance can actually accomplish.
How this plays out in your industry.
Some sectors get solicited far harder than others, and the way out differs. These guides cover why, and which structure actually replaces the advance.
Getting out, in restaurants
TruckingGetting out, in trucking
ConstructionGetting out, in construction
RetailGetting out, in retail
Auto RepairGetting out, in auto repair
Staffing AgenciesGetting out, in staffing agencies
HealthcareGetting out, in healthcare
Home ImprovementGetting out, in home improvement
We’ll tell you what comes out and what it costs.
Send the funding agreements and three months of bank statements. We’ll show you the combined daily remit, what a consolidation would replace it with, and whether it actually clears.
- Each funding agreement
- 3 months bank statements
- A/R aging (if you invoice)
- Current debt schedule