Mezzanine Financing Pros

If you’re raising capital to fund your project development, you may want to consider using mezzanine loan as part of your financing solution.

Mezzanine financing is a useful tool to fund developments, expansions or property acquisitions or completing a construction project. You can use it in combination with equity financing, line of credit, term loans, or as a substitute for bank loans. In a capital structure, it sits above equity financing.

Here are the benefits of using mezzanine finance:

  • It is cash-flow based. While banks look into your collateral, mezzanine investors look into your cash flow.  Traditional lenders focus their evaluation on your assets and financial documents when evaluating your loan application, so when borrowers lack tangible collateral and proof of higher income, banks won’t approve their application. On the other hand, mezzanine financing lenders often lend money to businesses with sufficient cash flow available to pay the interest and principal payments when they fall due.
  • Interest only capital. Mezzanine loans are flexible. It requires no immediate principal payments. Its interest-only capital feature with balloon payment upon maturity, allows you to use the money that would have gone to making the payments and use it to complete your project.
  • It has a longer maturity than bridge loan and other short term loans. Developers looking for long-term with a maturity of five years or morecan enjoy this long term financing option. You don’t have to worry about paying this loan back in the short term.
  • It is a reliable alternative funding source for borrowers seeking to finance property development, especially those that do not qualify for traditional bank loans with tougher capital regulatory requirements.

Windsor Capital assists lenders facing lending problems, as bank lenders increase regulation on development loans. We help fill the void for developers looking for funds to start and complete their projects in Melbourne.