Why Mezzanine? 5 Key Advantages over Traditional Funding

Mezzanine financing offers business owners a unique type of funding. This particular form of financing comes with a few advantages compared to traditional bank loans or equity capital. The three main benefits are:

1. Maintaining control of your company: Mezzanine lenders let the business run “as is” by leaving control of daily operations in the hands of the owner.
   
   They may have suggestions to improve efficiency, but as long as the business remains profitable, the owner will maintain control.
2. Flexibility: The structure of a mezzanine loan has more room for flexibility than other forms of funding. Mezzanine lenders are more focused on meeting the borrower’s long term financial needs and give them more freedom to use and repay the loan.
3. Cash Flow: Mezzanine lenders let you pay the loan back at the end of five years which gives you more cash flow to grow your business. It is interest only for most of the term.
4. Time frame: Where as conventional loans take place over two or three years, mezzanine often offers a 5-7 year loan. Mezzanine is a more patient type of loan.
   No Personal Guarantee – Banks want you to sign over everything to them but Mezzanine lenders take comfort in the “earnings value” of the business for repayment. They don’t need a PG so you can sleep easier at night.