Mezzanine finance is a hybrid of debt and equity which can be useful for large projects, management buyouts or growing businesses. The word comes from the Latin for “middle” and in some situations it can make more sense than debt or equity alone.
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Mezzanine finance is used in situations where the perceived risk is high enough that the borrower can’t raise enough money through a traditional loan. The alternative would usually be equity finance - but many companies don’t want to give up shares in their business.
Mezzanine finance allows businesses to borrow a larger amount which, if things go to plan, is paid for through profits gained. It facilitates a bigger investment aiming at a bigger return. Effectively, the debt becomes an equity share after a predetermined time frame has passed.
This means if the company can’t pay back the funding, the lender gets a share of equity instead. In this way, equity in the business is used as security. In other contexts, mezzanine finance blends debt and equity by offering a share of profit as well as interest payments.
Secured and unsecured flexible finance options available subject to eligibility
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7.63% APR Representative based on a loan of £50,000 repayable over 24 months. Monthly repayment of £2,252.94. The total amount payable is £54,070.56
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Annual Percentage Rate
Rates from 2.75% APR
1 month to 30 years terms