March 7th, 2017.



Mezzanine finance gets its name because it sits in the middle between debt and equity finance. It’s a complex form of business funding, but can be useful in a few different situations, representing a third option to be used alongside a standard loan, equity fundraising, or both.

Let’s have a closer look at mezzanine finance.

Debt and equity vs. mezzanine
Debt, equity and mezzanine finance are the three broad categories of business funding, and you’re probably familiar with the first two.

Debt finance is the technical term used to describe most borrowing, whether it’s a business loan, invoice finance or a commercial mortgage. The details vary, but the underlying concept is that the business is taking on a debt — the lender gives you cash in return for regular repayment that adds up to the principal amount borrowed plus interest. Therefore, with debt finance the lender usually has a clear idea of how much they’ll get back, often with a set timeframe too.


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