As a small business owner, accessing capital can help you grow and expand operations. But many merchants may not realize that combining multiple funding sources at the same time, often called capital stacking, requires careful planning to avoid overextending their business.
Here’s what all business owners should know.
What is Capital Stacking?
Capital stacking occurs when a business uses more than one funding source simultaneously to cover operational costs, invest in growth, or manage cash flow. For example, a merchant might take a revenue-based financing (RBF) advance from CFG Merchant Solutions and also secure a small line of credit from a bank. When done strategically, stacking capital can provide flexibility and allow for larger investments without waiting for a single funding source to cover all needs.
Why Careful Capital Stacking Matters
While accessing multiple funds may seem like a quick path to growth, it’s important to evaluate how each source impacts your business’s repayment obligations. Every lender or financing option evaluates your business’s revenue, cash flow, and outstanding obligations before extending funding.
Taking on multiple products without a clear plan can create overlapping repayment demands, which could strain cash flow. This is why many financial advisors recommend structuring capital in a way that aligns with actual revenue cycles rather than just borrowing as much as possible at once.
For example, revenue-based financing adjusts repayment according to your revenue performance, which can make it easier to combine with other short-term or revolving capital options without overcommitting.
How Capital Stacking Works
Capital stacking is possible because many financing products have different approval criteria and repayment structures. A merchant might qualify for one product based on monthly revenue, another based on receivables, and another through a line of credit.
Some business owners intentionally use multiple sources to maximize working capital, while others may not fully track how these obligations overlap. The key is understanding each lender’s expectations, repayment schedule, and how your business revenue fluctuates. Poorly managed capital stacking can turn a helpful growth strategy into a cash flow challenge.
A Smarter Approach to Capital Stacking
Instead of rushing to access as much funding as possible, consider a structured approach:
Evaluate Your Revenue Cycle – Align repayment schedules with your actual cash flow.
Start with Flexible Financing – Revenue-based financing, such as CFG Merchant Solutions offers, adjusts with your income and can be stacked with other responsible capital sources.
Build Relationships with Lenders – Many lenders offer renewal programs or higher credit limits for returning clients who demonstrate responsible repayment.
Plan Incrementally – Stack capital strategically over time rather than taking on multiple obligations at once.
By approaching capital stacking thoughtfully, merchants can increase working capital without risking financial strain, improve the cost of financing, and set the business up for sustainable growth.
Final Thoughts
Capital stacking can be a powerful tool when done responsibly, giving small business owners access to the funds they need to expand, invest, or manage seasonal fluctuations. By carefully assessing each funding option, aligning repayment with revenue, and leveraging flexible products like revenue-based financing from CFG Merchant Solutions, merchants can grow their business without overextending themselves.
Strategic capital stacking isn’t about borrowing as much as possible; it’s about using multiple funding sources in a way that supports long-term financial health and growth.