Mezzanine Loans- An Uplifting Force for Middle Market Companies

Mezzanine lenders are sophisticated financiers and all about cash flow. Long established in middle market finance, these lenders have developed cash flow underwriting techniques that allow them to make large loans to companies with minimal assets.

This lending approach is an uplifting force for companies in need of acquisition, expansion or growth capital. Using a multiple approach, they can lend 3 to 4 times a company’s adjusted EBITDA.

This is significant on two levels. In most instances, the multiple approach results in a larger loan sizes. 3 to 4 times EBITDA is usually much larger than any asset based loan you can get from a bank.

This is particularly true for low asset based businesses. Additionally, they will give you a multiple on adjusted EBITDA, which means they will allow you to addback certain expenses that are one-time or non-recurring in nature.

This lets you show a larger EBITDA and it has a compounding effect on the loan amount. For example, $1 of addback expense can increase your loan size by 3 times or $3 in additional loan.

This ability to use cash flow creatively and lend lower on the balance sheet makes mezzanine lenders an enlivening and uplifting force for many companies.

Mezzanine loans are available to middle market companies with good historical profitability, strong management teams and sensible growth plan. With their larger and more flexible loans, mezzanine lenders have the ability to uplift and elevate your business to new heights.

Whatever your growth strategy – be it regional expansion, acquisition, product growth, mezzanine loans are a great alternative solution for your capital need.