Since traditional lenders have tightened approval standards in recent years, many business owners are exploring alternative financing options to support growth and manage cash flow. One strategy that has become increasingly common is capital stacking, where a business uses multiple funding sources at the same time. While stacking capital can provide flexibility and access to more funds, it requires careful planning to ensure it benefits your business rather than creating unnecessary financial strain.
What is Capital Stacking?
Capital stacking occurs when a business combines two or more funding sources simultaneously to cover expenses, invest in growth, or manage seasonal revenue fluctuations. For example, a merchant might take a revenue-based financing (RBF) from CFG Merchant Solutions while also using a short-term line of credit or equipment loan.
Unlike reckless borrowing, strategic capital stacking focuses on aligning each funding source with a specific business need. This way, multiple products can complement one another rather than compete for repayment from the same revenue stream.
Why Responsible Capital Stacking Matters
While combining multiple funding options may seem like an easy way to boost cash flow, doing so without a clear plan can quickly become risky. Each funder evaluates your business’s revenue, cash flow, and existing obligations before approving a loan. If repayment schedules overlap or are misaligned with your actual revenue, your business can experience stress on cash flow, higher financing costs, and potential damage to credit.
The key is to use each source strategically. For instance, revenue-based financing adapts repayment to your actual sales, which can make it easier to combine with other short-term financing products without overextending your obligations. By contrast, stacking multiple short-term loans with fixed daily or weekly repayments could create unnecessary pressure and limit your ability to invest in growth opportunities.
How Capital Stacking Works
Capital stacking is possible because different financing products serve different purposes and evaluate creditworthiness differently. A business may qualify for a revenue-based financing advance based on monthly sales, a line of credit based on accounts receivable, and an equipment loan secured by the asset being purchased.
Some business owners attempt to maximize available funding by taking multiple loans simultaneously, but this can backfire if obligations become too complex to manage. Without careful planning, you could face overlapping repayment schedules, high interest costs, or even breach a lender’s agreement.
Strategies for Smarter Capital Stacking
A more sustainable approach involves planning and sequencing your financing:
Match funding to purpose – Ensure each loan or financing product has a specific function, such as payroll, equipment, or marketing investments.
Align repayment with revenue – Use flexible products like revenue-based financing to adapt repayment to cash flow patterns.
Build lender relationships – Returning clients who demonstrate responsible repayment may qualify for higher limits or better rates in the future.
Sequence funding incrementally – Instead of taking multiple loans at once, stagger funding to minimize overlap and reduce risk.
By approaching capital stacking strategically, business owners can increase working capital, fund growth, and maintain healthy cash flow without creating undue financial strain.
The Takeaway
Capital stacking doesn’t have to be risky—when done thoughtfully, it can give small business owners the flexibility to access multiple funding sources in a way that supports growth. The key is to plan your stack, understand repayment obligations, and align funding with your business’s actual revenue patterns.
Flexible solutions like CFG Merchant Solutions’ revenue-based financing can make capital stacking more manageable by adjusting repayment to your performance, giving your business room to grow while reducing the stress of overlapping fixed payments.
Smart capital stacking is not about taking as much money as possible; it’s about using multiple funding options responsibly to strengthen your business and support sustainable growth.