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Mezzanine Loans

Fill the gap between senior debt and equity

Mezzanine financing sits between senior debt and equity in the capital stack. It allows borrowers to increase leverage beyond what a first mortgage provides, reducing the equity needed for a deal. Secured by a pledge of the borrower's ownership interest rather than a lien on the property.

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Loan Range
$1000K – $100M
Typical Rate
10% - 18%
Down Payment
Reduces equity to 5-15% total
Term
1-7 years
Closing Time
30-60 days

🎯 Best For

  • Reducing equity requirement
  • Large acquisitions
  • Development projects
  • Recapitalizations

✅ Advantages

  • Reduce equity needed
  • No lien on property (pledge of ownership)
  • Flexible structures
  • Can be interest-only

⚠️ Considerations

  • High interest rates
  • Subordinate position = higher risk
  • Requires senior lender approval
  • Complex documentation

Mezzanine Loan Requirements

  • Strong sponsor track record
  • Viable business plan
  • Senior lender approval for subordinate debt
  • Adequate debt service coverage for total debt

Mezzanine Loans FAQ

How does mezzanine differ from a second mortgage?
A second mortgage is secured by a lien on the property. Mezzanine debt is secured by a pledge of the borrower's ownership interest in the entity that owns the property. This distinction matters for foreclosure — mezzanine lenders can take over the entity via UCC foreclosure, which is faster than mortgage foreclosure.

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