• Why should small businesses use mezzanine financing?

  • Sep 8 2021
  • Length: 2 mins
  • Podcast

Why should small businesses use mezzanine financing?

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  • Summary

  • Mezzanine debt is the equivalent of a second mortgage, but the financing is secured by stock or membership interest instead of real estate. Because mezzanine loans are unsecured, they are accompanied by higher interest rates and shorter terms.

    Mezzanine financing is a cross between debt and equity financing that allows business owners to contribute to their capital needs more than traditional debt. In a typical capital structure, mezzanine loans are placed on top of conventional loans.

    For investors, financing a mezzanine loan can be a good deal. Higher interest rates provide a better return on investment than traditional loans.

    In addition to not having to furnish any collateral, small mezzanine loans can make debt servicing more manageable. To know more about mezzanine finance Australia, listen to this episode.


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