Not Your Average Business Loan – Mezzanine Boosts for a Booming Business

Posted on: July 28th, 2017

mezzanine business loan If you want your business to explode, avoid the loans that might make it implode. Bank loans are not the only option you have.

A mezzanine lender could be the match to ignite your booming business. The question is, what is it that mezzanine financing can do for your business that other loans cannot?

First things first, how do these lenders differ from banks? For one, they give you more money than a bank loan without you having to worry about collateral.

In addition, you can have anywhere between two and five years before beginning to repay the lender. So, if you’re looking for an option that is low risk and (hopefully) high reward, mezzanine may be your best bet.

Who’s watching your assets? You! Mezzanine lenders fund off of your cash flow, not your assets. If your business plans go awry, and you cannot return the amount borrowed during the term, the lender is usually patient about receiving repayment until the business gets back on track.

Because the lender is reliant on cash flow with little collateral to support their loan, they need to give you room to work things out. If the business ultimately fails, the lender tries to salvage value through a sale or a restructuring.

Considering the possible outcomes with a bank loan, however, that’s not a bad deal. A bad breakup with a bank can is like an ugly divorce, and can lead to long lasting damage to the business.

Mezzanine lenders are more relaxed in a break-up scenario due to their need to preserve cash flow value. In the grand scheme of things, a mezzanine lender wants to see you succeed as much as you do.

They will wait for the return of their loan principal and give you the ability to focus on igniting the spark that lights up your entrepreneurial dreams. So, are you seeing fireworks yet? If you want to learn more, contact me at [email protected]

In the acquisition financing arena, capital availability is destiny as companies require reliable access to capital to grow over the long term. Unforeseen capital needs usually arise when acquirers least expect it. This can cause some concern for the acquisition financing provider, especially when covenants tighten up and that working capital availability is utilized faster than expected.

Mezzanine debt borrowing is usually a straightforward activity that many companies use for funding of transitional growth. Mezzanine debt lenders are highly transparent about their due diligence approach and their post-closing loan management making it easy for companies to engage with.

Elections have consequences and positive ones at that for the acquisition financing middle market. While much media attention is paid to the direction of the yield curve and the Fed’s likely rate cuts, scant attention is paid to the more important drivers of the acquisition financing market – business psychology and regulatory climate.