Can I take a second cash advance while one is still running?

Yes, a company can take a second cash advance while the first is running. The industry calls it stacking. It is legal, but it is the point where cash advances most often go wrong: two repayments come out of the same takings, the second advance usually costs as much as the first, and a quiet month hits twice. Do the combined maths before you sign.

What stacking does to your cash

Take the canonical example: £10,000 at a 1.35 factor rate over 6 months, paid daily, is 126 payments of £107.14. Add a second advance of the same size on the same terms and you are paying £214.28 every business day. Scale both to £50,000 and that is £1,071.42 a day, or roughly £22,500 a month at 21 business days.

Now look at your worst normal month. After wages, stock, rent and VAT, is £22,500 still there? If the answer depends on a good month, the second advance is a risk, not a solution.

Why companies stack

• The first advance solved a short gap, but the gap came back.
• A funder offered a "top-up" before the first advance was finished.
• A separate need appeared, such as stock or a repair, before the first was cleared.

The first two are warning signs. If you keep needing more, the problem may be margin or timing, not cash.

What to check before a second advance

1. Your current contract. Some agreements restrict further finance against the same takings without the first funder's consent.
2. The combined repayment. Add both, then test it against your slowest month.
3. The combined cost. Convert each to an APR. Two very expensive advances do not average out into a cheap one.
4. A personal guarantee on each. Two guarantees means two claims on you personally if things go wrong. Read the personal guarantee wording on each before you sign.

Sterling's take: the second advance is the one that tells you something. Listen to it.

Better options to look at first

• Refinance into one facility. One repayment, possibly a longer term. See how do I refinance a cash advance.
• A revolving credit facility. Draw when you need it, repay when you can. See revolving credit facility.
• Invoice finance, if the gap comes from customers paying slowly. See invoice finance.
• A term loan, if the need is longer than six months. A £100,000 loan at 18% APR over 24 months costs £4,992.41 a month, which is far easier on daily cash than two advances.

What to do next

Line up your current advance and the new offer in the offer checker and see the combined cost. Our funding partner looks at companies with two or fewer loans or advances running, so if you already have two, refinancing is usually the conversation to have.