Mezzanine financing, also known as subordinated debt, is a combination of debt and equity funding provided by a speciality lender. In other words, it’s a hybrid of debt and equity financing which is basically used by companies to facilitate their expansion costs.
This is a type of finance which requires little or no collateral and paperwork and tends to be for a short period of time. And it is wide used by small and mid-sized business owners as it integrates advantages of conventional borrowing with the flexibility of equity financing under a single functional arrangement.
Here are some benefits of mezzanine finance:
- Mezzanine financing model ensures that the owner retains complete control of the company and its direction as well, resulting in little or no intervention from the lender.
- This type of financing is acknowledged for its flexible arrangement, which allows customized solution to maintain the specific cash flow requirements of your business. You should approach an alternative lender to understand this mode of financing at length.
- Mezzanine funding is considered suitable for companies that have gone beyond their start-up phase, and require capital to finance their business operations.
- This mode of financing is always considered to be a lower cost alternative to raise equity or selling shares to an investor.
- Alternative Mezzanine lenders have experience in developing strategies to maximize long-term value of such financing option. This helps in providing you with remarkable strategic assistance and excellent business insights.
- Mezzanine funding ensures higher amounts of funding compared to a loan from a traditional bank or an asset- based loan. You, the businessman, is allowed to borrow three to four times its cash flow in a mezzanine deal.
In order to know what other benefits and advantages mezzanine finance offers, approach a trusted financial institution like Challis Capital that offer best alternative lending options to the businesses.