Access Financing, Loan Stacking, Loan Stacking For Maximum Capital.

Business loan stacking is the process of taking on multiple business loans in order to stack the value or amount of those loans to reach a higher or pre-determined amount or goal.

For example, let's say that the goal is to acquire half a million dollars in capital for your business. Gaining approval for a half million-dollar loan from a single lender can be an extremely difficult or in some cases an impossible goal. While at the same time stacking together the total of $500,000 by using multiple lenders from different funding programs can make the task achievable.

Let’s look at an example of how that might be done:

If the company has open invoices with larger size well established businesses, those invoices can be “factored” (sold) for an estimated 97% of their face value. If part of the capital need is for any type of equipment or software that can be leased instead of using working capital. If the owners have good credit, then each owner could obtain multiple business and personal credit cards and personal credit union loans to contribute to the amount needed. Assets from either the business or the owners personally can be used as collateral for business loans. If the business has existing revenue, then there are revenue-based loans. If the business currently has merchant account receipts, those can be used for a merchant account advance. If the business has contracts or purchase orders, those can be used to obtain cash. There are smaller SBA Express loans that are easier to qualify for. And then there are many business-to-business credit lines available for products and services that may be needed to achieve the goal.

There are many differences between personal and business loans.

One of those differences is that personal loans appear on your personal credit reports whether you use them or not. These same personal loans will then report on your personal credit reports every month whether you use them or not. That is not the case for business loans. Business loans and business lines of credit only appear on your business credit reports when you first use them and then after that initial use they will only appear on your business credit reports in those months when you use them again. It is this reporting gap that allows for the practice of loan stacking to take place.

In most cases businesses will get multiple business loans and loan types from a few different lenders and then not use any of those loans until the process of business loan stacking has reached its desired goal.

What the practice of business loan stacking and credit card stacking has led to is business lenders being concerned about your number of recent credit inquiries and the number of recently opened new credit accounts. If you have more than 3 new credit inquiries in the last 90 days, then many lenders who would have approved you will not approve you for what might be the next 6 months to see if loan stacking is what has taken place. Many lenders are also using what is called “Five in Twenty-Four”, which is where if your credit reports show that five or more new accounts have been opened within the last twenty-four months, they will then not approve more loan applications.

If your business utilizes the practice of business and personal loan stacking, you should be aware that it can normally only be used once. After the initial loan stacking has been completed your business should strive to become bankable to be able to take out or consolidate all the stacked loans in one loan that will be much larger in amount, at a much lower interest rate and with a much longer repayment term. Stacked loans tend to be smaller amounts, at significantly higher interest rates and very short repayment terms.