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MCA stands for “merchant cash advance.” It is a way for a business to get money upfront in exchange for a share of its future credit card sales and receivables. Stacking MCA loans means taking loans from more than one MCA lender without paying off the previous MCAs. The borrower runs the danger of incurring excessive debt and experiencing financial stress by trying to juggle multiple daily payments.
Debt Dumpster Fire
Stacking MCAs is a debt dumpster fire in waiting. Not only does this practice lead to a higher principal balance due than what was initially borrowed, but the borrower will likely be paying much more in fees and interest. The loans also become harder and harder to pay off as the total repayment amount continues to increase.
On top of all that, stacking MCA loans brings an additional risk: if one lender defaults, the borrower’s relationship with all of their lenders is jeopardized. They may be subject to punitive terms, such as higher interest rates or shortened repayment periods. It can lead to a debt spiral that could put a business in serious financial turmoil.
Stacking merchant cash advances is a tried and true way to ruin your business and drive it into the ground financially. The borrower is playing with fire and running the risk of not being able to pay back the debt, leading to long-term financial problems. It is best to avoid stacking MCA loans if possible and focus on finding ways to pay off existing loans quickly and responsibly.