What Are Stacked Advances?
Stacked advances refer to a situation where a business takes on more than one advance at the same time, often from different funders. In MCA and small business lending, stacking is risky because each new obligation increases repayment pressure on the applicant.
Stacked advances typically appear during bank statement reviews, where repayments to multiple lenders can be spotted. Operators use this information to determine whether an applicant has exceeded acceptable debt levels.
How Do Stacked Advances Work?
Stacked advances are detected by reviewing repayment flows and comparing them against applicant revenue.
- Transaction parsing: Bank statements are scanned for recurring payments to multiple lenders.
- Repayment tracking: Outflows to different funding companies are identified.
- Burden calculation: The total repayment amount is compared to applicant deposits to measure strain.
- Risk surfacing: Multiple obligations are flagged as stacked advances, signaling higher risk.
In Heron, stacked advances are surfaced automatically.
- Automated parsing: Transactions are extracted from bank statements through intake.
- Debt detection: Heron identifies multiple repayment flows that indicate concurrent advances.
- Structured outputs: Results are written into CRM fields with repayment amounts, frequency, and lender details.
- Next action: Deals with stacked advances are routed to exception queues or declined if they breach appetite thresholds.
This keeps underwriters from missing stacking risk hidden in complex transaction histories.
Why Are Stacked Advances Important?
For brokers and funders, stacked advances are a major red flag. Businesses that already have multiple repayment obligations are much more likely to default if they take on additional funding.
Heron’s automation makes sure stacked advances are caught every time, protecting funders from hidden risks and making underwriting faster and more consistent.
Common Use Cases
Stacked advances are applied across submission reviews.
- Flagging applicants repaying multiple lenders at once.
- Surfacing repayment patterns that exceed appetite rules.
- Writing stacked advance details into CRM fields for underwriting visibility.
- Screening out applicants with repayment burdens that threaten sustainability.
- Escalating high-risk deals with multiple advances for manual review.
FAQs About Stacked Advances
How does Heron detect stacked advances?
Heron parses bank statements, detects recurring payments to multiple funders, and records repayment patterns in the CRM. This makes stacked advances visible immediately.
Why are stacked advances risky for MCA underwriting?
They increase repayment burden beyond what the business’s revenue can sustain, leading to higher default risk. Stacking also complicates recovery if a business fails.
What outputs should teams expect from stacked advance detection?
Teams receive structured CRM fields showing repayment counts, repayment totals, and flagged risk notes. These outputs feed directly into appetite screening and underwriting.