3 Benefits Of Mezzanine Financing for SMEs

 

One Hundred Dollar Bills

Mezzanine financing has become something of a buzzword in the commercial lending sector. In simple terms, mezzanine financing is a combination of debt and equity financing. It allows investors to reap a higher return in debt as compared to other forms of debt.

Read on to learn about the benefits of mezzanine financing for small and medium enterprises.

1. Diversify your sources of financing

Mezzanine financing allows you to diversify your sources of financing. This is a great way to avoid being totally dependent on one single lender.

Most banks also have a positive view of companies backed by mezzanine loans given by reputed institutional lenders. It can become easier for you to secure more credit from a bank if your business is already associated with a mezzanine lender.

2. Lower financing costs than equity

Mezzanine lenders typically aim for an internal rate of return between 15 to 25 percent, which is lower than what equity investors ask for (25 percent and up). Choosing mezzanine financing can lower your business’s financing costs compared to equity financing.

3. More flexibility

Mezzanine financing is known for offering greater flexibility to both the lender and the borrower.

The terms of mezzanine loans are generally far more flexible than those of bank loans. Mezzanine financiers are willing to provide larger loans, allow the funds to be used in more diverse ways, and adjust amortization payments according to the business’s size and scale of operations.

If you are an up-and-coming business, you can benefit from choosing mezzanine financing. You’ll also get to keep control of your business as the terms of mezzanine loans protect the business owner from losing control of their company. The lender has the right to convert your debt into equity if you fail to pay back your loan, but you’ll still retain control over your company.

A Piggy Bank
Explore the best financing solutions with private lenders in North Carolina

Are you looking for mezzanine financing or commercial lending options? Check out Global Capital Partners Fund, LLC. A firm of private lenders in North Carolina, they provide a range of financing solutions for small, medium, and large enterprises.

Their financing solutions for businesses include mezzanine financing, bridge financing, asset-based lending, permanent financing, and structured joint venture financing.

You can reach out to them for queries about their real estate financing solutions. Contact them on their website or give them a call at+1-800-514-7350 or +1-800-207-2666. They can be reached via email at contact@gcpfund.com.

 

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