Mezzanine Financing


Business Financing
Commercial Lending

What You Need to Know About Mezzanine

A mezzanine loan is like a mortgage only that business stocks secure it. Since mezzanine loans aren’t secured by really properties, lenders advance them at higher rates and on short terms. If you are looking for a cost-effective loan,consider seeking help from ABG International Inc.

Mezzanine Financing Definition

A mezzanine loan is a mixture of debt and equity financing that entrepreneurs use to fund their business needs.

What are Mezzanine Financing Benefits?

There is a wide range of mezzanine loan financing benefits, as explained below.

Easy to procure and flexible Applying for a mezzanine loan is a straight forward thing. Due to the flexibility of a mezzanine loan, repayment is based on a business’ cash flows

No security requirement With a mezzanine loan, you don’t have to worry about collateral or personal guarantees.

Company control Unlike debt finance, the lender will not interfere with your business operation in case of default or delays in loan repayment.

Ideal for business expansion Mezzanine loans are appropriate for businesses that are past the start-up stage but don’t have the capital to finance their growth. Companies with strong cash flows may also apply for mezzanine loans to expand their businesses.

How Mezzanine Financing Works

A mezzanine loan is applicable when you have used up your asset-based loan or regular loan. With this loan, you will get capital quickly without having to use collateral. As a business owner, you may need a mezzanine loan to bridge a gap between the cash you have and the debt you qualify for. For instance, a bank may require you to contribute 20% of the loan amount as one of the conditions to approving your loan. If you can’t raise the 20% contribution, you will have to borrow a mezzanine loan to bridge the gap.

About Mezzanine Loan Financing Rates

Mezzanine loan financing rates vary from lender to lender. The majority of lenders offer their mezzanine loans between 12-20%. Note that this rate is higher than that charged on traditional types of debt finance.

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Final Thoughts

A mezzanine loan is meant to bridge the gap between the cash you have and the credit you qualify for. Before you apply for a mezzanine loan, please consult a financial expert, such as ABG International Inc, for advice.