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Anti-stacking clause
Also called avoidance of stacking, no additional financing clause, protection clause.
The contract term that makes taking further financing while an advance is outstanding an event of default, independent of whether payments are being made.
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What it means
Almost every merchant cash advance agreement contains one. The wording ranges from a narrow bar on additional advances secured by the same receivables to a blanket prohibition on incurring any new indebtedness, sometimes including equipment leases, credit lines and even trade credit above a threshold, without written consent.
It exists because stacking destroys the funder's position. A second daily debit on the same account reduces the first funder's collection odds without giving it any additional security, and the second funder is often relying on the same receivables the first one claims to have purchased.
Enforcement is real. Breach typically triggers acceleration of the full purchased amount, the security interest, collection costs, and where the documents allow it, the confession of judgment. Because funders monitor the bank account, a new deposit followed by a new daily debit pattern is visible almost immediately.
The clause also drives broker behavior. Some brokers arrange a second position knowing it breaches the first agreement, and the merchant discovers the default when the first funder accelerates. The commission is paid either way.
Where this one catches people
Merchants read this as a rule about cash advances. Broad wording can cover an equipment lease, a business credit card line, an SBA loan or an invoice factoring facility, so a business that carefully avoided a second advance can still be in technical default for financing a truck. And breaching it does not require missing a single payment, which is why merchants are blindsided by an acceleration while current.
Where you will meet this term
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Anti-stacking clause — common questions
What does anti-stacking clause mean?
The contract term that makes taking further financing while an advance is outstanding an event of default, independent of whether payments are being made.
Where does anti-stacking clause catch people out?
Merchants read this as a rule about cash advances. Broad wording can cover an equipment lease, a business credit card line, an SBA loan or an invoice factoring facility, so a business that carefully avoided a second advance can still be in technical default for financing a truck. And breaching it does not require missing a single payment, which is why merchants are blindsided by an acceleration while current.
Is anti-stacking clause the same as an interest rate?
Anti-stacking clause is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.
Which products does anti-stacking clause apply to?
Merchant Cash Advance, Working Capital, Revenue-Based Financing.
Is there a worked example of anti-stacking clause?
Not on this entry. Where a term is arithmetic, the arithmetic is shown; this one is not primarily a calculation.
What else should I read alongside anti-stacking clause?
Acceleration clause, Consolidation, Cross-default, Default, Reverse consolidation.
Has this definition been checked?
Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.
Is this legal advice?
No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.
Can I suggest a term?
Yes — [email protected]. The glossary grows from what people are actually shown in contracts.