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Glossary
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Mezzanine financing

What is mezzanine financing?

Mezzanine financing is a hybrid form of financing that combines elements of debt and equity financing. It's typically used by companies that are looking for capital for expansion or to finance an acquisition, but it can also be used in a variety of other situations. Mezzanine financing is often used when the borrowing needs of a company exceed what traditional lenders are willing to provide.

Mezzanine financing involves debt that can be converted into equity if the loan is not paid back in time. This provides a safety net for lenders as they can claim ownership if the borrower defaults. However, because of its high-risk nature, mezzanine financing usually comes with higher interest rates compared to traditional loans. This form of financing is often more complex and should be carefully considered in relation to the company's financial structure and future plans.

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