MEZZANINE LOAN:

Mezzanine Loans are a type of hybrid financing that combines the elements of both Debt and Equity. A Lender may not be willing to provide all the necessary funds for a Project, so you may need to consider other creative financing options such as Mezzanine Loans. These Loans are typically secured through a subordinate Lien on the Property or by assuming an interest in the owning Entity (such as a Partnership, Trust, Corporation, LLC, Delaware Corporation, Estate, or even a Foreign National holding). Mezzanine Loans generally have flexible repayment Terms but also relatively higher Interest Rates when in comparison to other forms of Financing. In the realm of Commercial Real Estate, Mezzanine Loans can offer unique benefits by boosting returns and simultaneously reducing out-of-pocket expenses.

OK… BUT WHAT DO THEY APPLY TO?

Mezzanine Loans are a versatile form of Financing that can adhere to a broad range of leveraging options, including, but definitely not limited to, Long Term Mortgages, New Construction Loans, Cash-Out Loans, Refinances, CMBS, Bridge Loans, Preferred Equity, and even Private Equity. When choosing to pursue a Commercial Mezzanine Loan, success typically depends on the your specific circumstances, which often align with one or more of the funding vehicles mentioned above.

Mezzanine Loans can also be particularly beneficial for Companies with limited Assets to use as collateral, as the Financing is often secured through an Equity stake in the Business rather than physical Assets. This can make it an attractive option for Businesses that have valuable intangible Assets, such as Intellectual Property or a strong Brand, but may not possess sufficient tangible Assets to secure a Traditional Loan.