What is Mezzanine Financing?

Mezzanine Financing is a hybrid of debt and equity financing.  This product is a loan that is used to finance the expansion of an existing company and it takes the form of debt capital. 

Why Mezzanine Financing?

Mezzanine Financing is beneficial because it is treated like equity on a balance sheet and can be used as additional leverage for secured debt.  There is usually very little or no collateral to support the advance although security interests may be taken with a junior position to that of the current secured lender. 

Rates are charged as an interest component that is paid monthly or quarterly to the funding source.  Mezzanine debt can also carry incentive “kickers” to increase the yield to the funding source if certain financial goals are met.  These types of loans can be converted to equity if the terms are not met within the necessary timeframes.

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