Mezzanine Financing

	Definition of 'Mezzanine Financing' A hybrid of debt and equity financing that is typically used to finance the expansion of existing companies. Mezzanine financing is basically debt capital that gives the lender the rights to convert to an ownership or equity interest in the company if the loan is not paid back in time and in full. It is generally subordinated to debt provided by senior lenders such as banks and venture capital companies. Since mezzanine financing is usually provided to the borrower very quickly with little due diligence on the part of the lender and little or no collateral on the part of the borrower, this type of financing is aggressively priced with the lender seeking a return in the 20-30% range.
	Investopedia explains 'Mezzanine Financing' Mezzanine financing is advantageous because it is treated like equity on a company's balance sheet and may make it easier to obtain standard bank financing. To attract mezzanine financing, a company usually must demonstrate a track record in the industry with an established reputation and product, a history of profitability and a viable expansion plan for the business (e.g. expansions, acquisitions, IPO).
	Related Video for 'Mezzanine Financing'

Related Definitions

Will Corporate Debt Drag Your Stock Down?

Borrowed funds can mean a leg up for companies, or the boot for investors. Find out how to tell the difference.
How The Big Boys Buy

Learn what those in-the-know look for when acquiring a company.
The Fuel That Fed The Subprime Meltdown

Take a look at the factors that caused this market to flare up and burn out.
Uncovering Hidden Debt

Understand how financing through operating leases, synthetic leases, and securitizations affects companies' image of performance.
What do people mean when they say debt is a relatively cheaper form of finance than equity?
Should You Invest Your Entire Portfolio In Stocks?

It is true that stocks outperform bonds and cash in the long run, but that statistic doesn't tell the whole story.
The Uses And Limits Of Volatility

Check out how the assumptions of theoretical risk models compare to actual market performance.
Risk Tolerance Only Tells Half The Story

Just because you're willing to accept a risk, doesn't mean you always should.
5 Tips For Diversifying Your Portfolio

A diversified portfolio will protect you in a tough market. Get some solid tips here!
Invest Like A Pro

By following the strategies of the pros, even a beginner can learn to invest like an expert.

Why Americans Think Bush Is To Blame For The Economy	The Complete Guide To Calculating Your Net Worth		Top Investment Trends For 2013	5 Viable Career Options In 2013
	How Do Internet Browsers Make Money?	Commodities Of The Future	Trending Stocks And The January Effect