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Debt stacking worksheet

List every facility, convert daily and weekly debits onto one scale, and see what share of the business the payments are actually taking.

Reviewed and updated · How we research this

Stacking is taking a second, third or fourth advance while earlier ones are still running. It rarely looks like a decision — each individual advance solves that week's problem. The arithmetic only becomes visible when you put them on one page, which is what this does.

List every facility. Include merchant cash advances, anything taking a daily or weekly debit, equipment loans, and cards carrying a balance.

0Facilities
—Total owed
—Monthly debt service
—Of revenue
—Coverage ratio

Daily payments are converted at 21.67 business days a month and weekly at 4.333 weeks, so everything is comparable on one scale. Operating cash flow means roughly EBITDA — earnings before interest, taxes, depreciation and amortization. Nothing you type here leaves your browser.

Why daily debits distort the picture

A $400 daily payment does not feel like $8,668 a month, which is what it is. Products priced on a factor rate with daily repayment are designed around exactly that gap in perception, and an owner comparing a daily debit to a monthly loan payment is not comparing like with like.

This worksheet converts everything to a monthly equivalent so the comparison is real.

The three numbers that matter

  1. Total monthly debt service. What leaves the business every month to service debt, whatever the payment frequency.
  2. Debt service as a share of revenue. Past roughly 20%, most small businesses are financing rather than operating.
  3. Coverage. Operating cash flow divided by debt service. Below 1.00 the business is not generating enough to pay its debts, and no new borrowing fixes that. See DSCR.

If the numbers are bad

  • Do not take another advance. It is the intuitive move and it accelerates the problem.
  • Check your other loan agreements for a no-additional-debt covenant. Taking an advance while one is in force may already have defaulted that loan.
  • Look at consolidation carefully, not hopefully. Some of it is legitimate and much of it is another advance wearing a different name — see is MCA consolidation legit.
  • Talk to the holders before you miss a payment, not after. Leverage disappears at default.
  • Get a commercial finance attorney if there is a confession of judgment in any agreement.

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