Loan Programs - Mezzanine Loans
Mezzanine Financing consists of a blend of debt and
equity. Mezzanine financing is typically used to fund the expansion of
existing businesses and it is basically debt capital in the form of
preferred stock or debt that gives the lender the rights to convert to an
ownership or equity interest in the company if the loan is not paid back
in time and in full. It is often subordinated to debt provided by senior
lenders such as banks and venture capital companies.
Mezzanine financing is usually provided with high interest rates (above
20% is not uncommon) to the borrower. This is due to the speed of the
financing, often very quickly with little due diligence on the part of the
lender and little or no collateral on the part of the borrower.
