Hey pal,
If you don't want to go for traditional financing, you can always opt for a mezzanine loan. It is a type of non-traditional finance arrangement. You need to conduct research and due diligence about all loans before choosing one. Keep reading, I will answer all your doubts about the meaning, interest rate, and examples below.
What is a mezzanine loan?It is a loan where the debt of the borrower is combined with equity for the money lender. Here, lenders give subordinated loans to the borrowers and receive equity interests along with the loan amount. Usually, these loans have a high-interest rate and flexible terms of repayment.
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Terms, conditions, and mezzanine loan interest rates are decided by the lender. The track record of the borrower is an important factor that is looked at. The lender will prefer to give a loan to a company that is operating in profit. Interest rate is usually in double digits, borrowers also give equity along with supplement interest income.
Pros :Mezzanine loan real estate is a hybrid. Businesses usually opt for this loan when they need funds for an acquisition. This loan is advantageous because it gives quick access to capital and minimises equity dilution. There are different repayment options as well.
Cons :
The major disadvantage of the loan is the risk of equity loss and sharing control of the asset with the lender. I hope all your doubts about the mezzanine loan have been cleared.
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Authors Of The Question
What is a mezzanine loan ?
Faizan
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2 Year
2022-06-27T20:33:06+00:00 2022-06-27T20:33:08+00:00Comment
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