Beware the dangers of loan stacking

Loan Stacking is the practice where businesses takes out multiple unsecured loans or cash advances on top of other unsecured loans in order to keep funding a business. The lender may or may not be aware of all the other loans and it provides a false picture to the lender of the actual indebtedness of the business. This is usually not sustainable as at some point a lender will realise and decline further lending or call their lending in if they realise the full position. If a business has to continually take on multiple unsecured loans without a clear strategy or just to keep the cashflow running, then at some point the whole thing is likely to come crashing down. This a hot topic in the funding industry at the moment.

 

 

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