Why Mezzanine Finance is a Great Option for Business Funds
Growth is the fuel of business. As a business or property owner, you’re naturally keen to seize opportunities to expand.
For this, you need funds. Sometimes, the loans you have already taken from banks and other lenders do not cover such expansion costs. At such times, you could look at mezzanine financing. It’s a great option between debt and equity financing.
In this way, mezzanine financing is useful for filling in the gaps. It is true that the interest on funds in this case tend to be on the higher side. However, the upside is that you don’t have to abandon any project for lack of money. Whether it is in real-estate or any other field.
Loans in this method of financing can be secured or unsecured. Those whom you borrow from have a claim that is ahead of equity holders, and behind lenders such as banks. That’s why it’s referred to as mezzanine: it’s in between.
That’s why mezzanine finance is free from conventional and traditional restraints of commercial finance. Many developers in construction and real estate have been quick to see its possibilities. Mezzanine finance has been able to enhance their borrowing potential.
Thus, it can be an attractive option for first-time commercial real estate property businesses, as well as for investors who need to expand their property but do not have enough funds.
Typically, such mezzanine loans are given for the intermediate term. For example, from three to five years. Shorter and longer periods are also possible, depending on the specific nature of the loan and the need of the business.
At Hubbe, we have expertise and experience in just this form of financing. Contact us to know more about our consulting, broking and structuring services, and you’ll discover how mezzanine financing can be your milestone to success.