{"id":2868,"date":"2020-03-23T17:59:33","date_gmt":"2020-03-23T17:59:33","guid":{"rendered":"http:\/\/localhost\/2020\/swoopMW20\/?post_type=knowledge-hub&p=2868"},"modified":"2025-08-18T09:02:30","modified_gmt":"2025-08-18T09:02:30","slug":"mezzanine-finance","status":"publish","type":"knowledge-hub","link":"https:\/\/swoopfunding.com\/na\/knowledge-hub\/mezzanine-finance\/","title":{"rendered":"Mezzanine finance"},"content":{"rendered":"\n
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\n \n What is mezzanine finance? <\/a>\n <\/h5>\n <\/div>\n\n
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Mezzanine finance<\/a> is a hybrid of debt and equity financing that can be useful for large projects, buyouts, or expansion. It is a fairly complex form of business loan that gives the lender the right to a share of equity in your business if you default on your loan. Mezzanine finance comes under the umbrella of private debt<\/em><\/a>.<\/p>\n

Mezzanine finance sits in the middle between debt and equity finance (\u2018mezzano\u2019 is Latin for \u2018middle\u2019). You might use it as a third option alongside business loans<\/a> and equity finance<\/a> if you\u2019re thinking about an acquisition, buyout, or expansion. You can also see it as a form of top-up finance if you can\u2019t borrow as much as you need but don\u2019t want to give away equity at the outset.<\/p>\n <\/div>\n <\/div>\n <\/div>\n

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\n \n Why choose mezzanine finance? <\/a>\n <\/h5>\n <\/div>\n\n
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Mezzanine finance is effectively a business loan<\/a> with a twist. Arrangements can differ, but in most cases, if you can\u2019t pay back the debt within a pre-agreed timeframe, then the debt becomes equity. In other words, the lender gets a share of equity in your business if you default on your loan \u2013 you\u2019re using equity as your security.<\/p>\n

Mezzanine finance is often subordinated to bank debt. This is the most common form, also known as a subordinated loan. This is subordinated in priority of repayment to senior debt, but senior in comparison to common stock or equity.<\/p>\n

This type of financing is more suitable for existing businesses with at least two years of successful trading history. Startups with low revenue may struggle to obtain this type of financing.<\/p>\n <\/div>\n <\/div>\n <\/div>\n

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\n \n Pros and cons of mezzanine finance? <\/a>\n <\/h5>\n <\/div>\n\n
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