startup business loans Startup Business Loans | Page 14

MEZZANINE LOAN
To start with, what exactly is a
mezzanine loan? Mezzanine
financing is a unique financing
instrument
which
doesn’t
cleanly fall into a specific class
of the capital markets financing
quadrant. It’s a wellknown term
that refers to any financing
vehicle that bridges the gap
between senior debt and
sponsor fairness. it is able to
be structured as desired
fairness or as debt.
In popular, conventional mezzanine financiers are not
entitled to get hold of returns on their investments until
senior debt holders are fully compensated. due to its
subordinate position, the mezzanine loan assumes a
better chance profile than senior debt however retains a
much less unstable role than preferred fairness. With this
knowledge, Mezzanine debt investors are looking for
returns among senior debt lenders and preferred fairness
traders however this may in large part depend on how the
deal is dependent.