Second positions, stacking, and when we tell you no

A first position is a business with no advances outstanding. A second position is one advance already being paid. Stacking is piling advances onto a business already carrying a heavy daily load. The first two are ordinary. The third is how businesses fail.

Cumulative daily load

Every position takes a daily or weekly debit. Add them all up and divide by daily revenue. Past fifteen to twenty per cent the business is stressed. Well past it, the next advance is being taken to make the payments on the last one, and that is the spiral.

When a second position works

• Revenue has grown materially since the first advance
• The capital produces new revenue: a signed order, a second location, a piece of equipment
• The load after the new position still sits comfortably under the line

When the answer is consolidation

If the load is already heavy, the smarter move is usually a consolidation: pay off what is outstanding and roll it into one advance with one remit the business can carry. Many funders will pay off up to two existing positions to do it. We will tell you when that is the right conversation.

When we walk

Heavy load, mounting NSFs and shrinking deposits pointing the same direction means the honest answer is not more capital. We will say so. Walking away protects you, and it protects our name. There will be another deal. There will not be another reputation.