Mezzanine debt is subordinated debt that fills the gap between equity and senior debt or other subordinated debt. This type of financing is typically utilized to finance leveraged buyouts, to fund internal growth strategies, or to recapitalize a company’s balance sheet.
Mezzanine loans will often include an option for an equity stake in the company in the form of warrants. Thus, mezzanine debt can be used as an alternative to conventional subordinated debt where the terms of the first position loan prohibit junior liens. Given the risk involved, mezzanine financing typically requires a 16 to 30 percent return on investment.
Mezzanine Financing with CNF Exchange
Mezzanine financing is a hybrid lending arrangement; it combines characteristics of classic equity financing with debt financing. CNF Exchange can put your company in touch with mezzanine lenders who can provide you with mezzanine financing arrangements to manage short-term cash flow difficulties or to achieve long-term business goals. Lenders typically make a decision on mezzanine loan applications in a short period of time to provide funds more quickly; as a result, these loans typically entail a greater degree of risk for lending institutions. You should expect to pay higher interest rates in most cases for mezzanine lending arrangements than for other types of collateralized debt. In many cases, lenders may secure the debt against the company itself. CNF Exchange can help you identify and apply for the mezzanine loan arrangements that are best suited to your corporate needs. In addition, you won't pay a cent until you find a lending opportunity that you would like to pursue. Because we work with a large network of lenders, we can provide you with the widest array of choices for your funding requirements.