Bank statement analysis
MCA stacking: what it is and how lenders detect it
Last updated · Kaaj editorial team
MCA stacking is when a business takes out more than one merchant cash advance at the same time, so several funders are pulling daily or weekly payments from the same account. Each new position reduces the cash left to repay the others, which is why funders and lenders check bank statements for existing positions before funding.
Why stacking matters
MCA remittances come out daily or weekly, so a business with three or four positions can see a large share of its deposits leave before it pays operating expenses. Stacked positions are often missing from the application, which makes the real debt load and DSCR much worse than the file suggests.
How to spot MCA positions in bank statements
- Recurring daily or weekly ACH debits for the same amount to a funder or processor name
- Large round-number deposits labeled as funding, followed within days by new recurring debits
- Debit amounts that step up after a renewal or a new advance
- Positions that start soon after another funded, which signals stacking rather than a refinance
- UCC filings by MCA funders that do not appear on the application
How stacking changes the credit picture
- Annualize every remittance and add it to debt service; the DSCR effect is often large
- Remove MCA proceeds from revenue so the funding itself does not inflate true revenue
- Check whether existing contracts prohibit additional financing, which affects how a new position would be treated
How lenders automate detection
Kaaj analyzes bank statements to separate MCA and loan proceeds from operating revenue, identifies recurring funder debits across every month in the package, and flags MCA stacking alongside NSFs and negative balance days, so the underwriter sees each position and its payment before deciding.
Frequently asked questions
What is an MCA position?
An MCA position is one active merchant cash advance with its own funder and remittance schedule. A business with three active advances has three positions.
Is MCA stacking illegal?
Not in itself, but many MCA contracts prohibit taking additional financing without the funder's consent, so stacking can breach existing agreements. This is general information, not legal advice.
How do you calculate the impact of MCA stacking on DSCR?
Annualize each position's daily or weekly remittance, add the total to annual debt service, and recalculate DSCR. Also remove MCA proceeds from revenue.
Can software detect MCA stacking automatically?
Yes. Bank statement analysis tools identify recurring funder debits and funding deposits across months. Kaaj flags stacking as part of its bank statement analysis.