As a small business owner, you might have wondered, “If I already have a loan can I get another?”
In short: Yes.
But that doesn’t mean that you should.
There are times when small business owners take out loans only to discover:
1) They didn’t receive the exact amount needed and have to seek out more capital, or
2) They need more cash flow before their first debt has been repaid
In such a circumstance, many owners have turned to stacking in order to get the cash that they need. In short, stacking is when a business owner takes out an unsecured loan or cash advance is addition to an unsecured loan or advance that they already have in place.
So what does loan stacking mean for a business owner?
You’ve probably guessed it: more debt, more due dates to consider and more interest rates to pay.
In general, loan stacking is a high financial burden for the owner, not to mention a risk for the lenders. In the face of stacking, alternative lenders want a first position, which means that in the event that the borrower defaults on their loan, they have a secured spot at being first in line to recoup funds.
Today, more borrowers (and lenders) are leaning towards business loan consolidation and refinancing when faced with needing more capital. This practice involves consolidating existing business loans in to one lump payment, often by using the new loan to pay off the old loan and lowering the daily payment or interest rates. Additionally, interest rates fell almost a full point in February 2015, causing even more small businesses to consider refinancing to take advantage of the lower payments.
Small business loan consolidation and refinancing can be, and has been, the perfect solution for companies in need of more capital and less headache. Rather than taking on the responsibility of multiple loans, multiple lenders and increased interest rates, owners are able to combine their stacked loans and lower their daily payments with a comfortable solution that just works.