Brief Guide to Mezzanine Financing

Brief Guide to Mezzanine Financing

Many investors are unaware of what mezzanine financing is and how it can be beneficial for them. Mezzanine financing options were first used in the 1980s for transactions involving the privatization of various public companies.

It is based on the concept of using a combination of debt and equity financing solutions.

Mezzanine financing allows the lender to take ownership of an entire company, or certain shares of it, if there is a default. The financing option is considered as equity on the balance sheet of the company.

Mezzanine financing solutions are commonly availed by investors and business owners for investing in properties and have proven to be useful tools for helping real estate businesses undertake development projects.

What are the benefits of using mezzanine financing?

Here are some of the major benefits of using mezzanine financing:

  • Mezzanine financing decreases the equity amount that you need to invest in a project and can be availed when you have insufficient liquidity to invest.
  • It is much cheaper than equity financing and requires minimum input of funds, but enables the investor to receive maximum returns.
  • Mezzanine financing options are much easier to repay than conventional bank loans because they are provided by hard money lenders and come with flexible terms and conditions which can be renegotiated if borrowers are finding it difficult to meet the payment schedules.
  • It helps investors increase their investor portfolio to minimize the risk factor involved.
  • The loan amounts provided by banks usually never exceed three-quarters of the total cost of the project, but mezzanine financing can cover as much as 90% of the total costs involved.

Mezzanine financing is perfect for long-term investments

Mezzanine financing solutions are ideal for investments made on a long-termbasis. If you are looking to make quick profits, mezzanine financingmight not be the best option for you. Investors with an equity interest in a businesscan end up making an excellent profit using mezzanine property finance if the business does well financially over the years.

Mezzanine financing is a strategic option that needs to be availed smartly to ensure that you do not suffer unnecessary losses caused by improper planning and poor investment decisions.

Avail a good mezzanine financing package

If you are interested in knowing more about how mezzanine property finance can help you make decent long-term profits, get in touch with our expert financial advisors who have had years of experience helping business benefit from all kinds of loan packages.

Apart from providing customized mezzanine financing solutions, GCP Fund Ltd. also offers commercial financing for acquisition, bridge financing loans, and interim construction loans with convenient repayment terms.

To reach out to us, call 1-800-514-7350, or email us at contact@gcpfund.com.

 

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