Stacking Questioned at Lend360

The stacking debate reemerged at Lend360 in Atlanta last week when one small business funding company promised during a breakout session to sue competitors that stacked on top of them for tortious interference. The warning wasn’t hollow either. The company, who you could probably guess the identity of, has already sued at least one funder. Many people are interested to see what the outcome of that case will be and the precedent it could set.

Meanwhile, during Thursday’s Current Trends and the Future of Small Business Lending panel moderated by Bob Coleman, industry captains generally denounced stacking as a bad thing. But bad for who, wondered Josh Karp, the Head of Operations for CFG Merchant Solutions. During the Q&A session at the end of the panel, Karp spoke from the audience and asked whether or not second position deals could appropriately serve as a bridge for merchants who have already taken a long-term product (12+ months) and were not eligible for a renewal from their current funding provider. To translate, could an outright restriction on stacking be harmful to merchants who have used a long-term product and now have a short-term need?

The panelists were mostly evasive with a handful declining to answer the question, one saying it wasn’t applicable to them because they were short-term lenders themselves, and another saying they could see how it wouldn’t be fair to expect a small business to not need additional funding with a two-year loan term.

For now, the industry debate remains unresolved.

Sean Murray is the President and Chief Editor of deBanked and the founder of the Broker Fair Conference. Connect with me on LinkedIn or follow me on twitter. You can view all future AltFinanceDaily events here.