Project Mezzanine financing

About project Mezzanine financing

Do you need to find the optimal form of financing for your business? Mezzanine financing will help you find the optimal combination of equity and debt capital to achieve your goals. Mezzanine financing is a form of loan, a combination of debt and equity financing that an established company needs for further expansion, to support specific growth projects, or acquisitions. It is designed to provide cash to an existing business that requires an increase in financial resources, or for leverage buyouts, or company restructuring. It is used when traditional loan financing is not feasible.

Common reasons for mezzanine financing:

• Significant expansion and company growth
• Financing acquisitions
• Ownership transfers
• Restructuring

The advantage for a company in obtaining mezzanine financing is that the provider of mezzanine capital can be a long-term investor in the company. This facilitates obtaining other types of financing because traditional creditors generally consider a company with long-term investors as more creditworthy, thus making it more likely for such a company to receive a loan and favorable terms.

Mezzanine loans assist in generating more capital and allow increasing the return on equity. Payment is not required during the term of the debt, only at the end of the period. This allows for an improvement in cash flow. The company can thus use additional available funds to repay other existing debt, invest in working capital, product development, or expand its financial market.