Dangers of loan stacking

Access to the right funding at the right time is critical.

- Tshehla Cornelius Koteli

Maintaining a steady cash flow is one of the biggest hurdles for business owners in today's challenging economic climate. Access to the right funding at the right time is critical for managing seasonal slowdowns and capitalising on growth opportunities.

Brent Downard, head of credit at Merchant Capital, said when a single loan doesn't seem like enough, some businesses turn to loan stacking – a risky approach that can lead to financial strain.

He added that it is important for small and medium enterprises (SMEs) to know the dangers of loan stacking.

What is loan stacking? Loan stacking is when an individual or business takes out multiple loans from different lenders within a short period.