One of the significant and primary goals you should have in your business is expansion and growth. Sometimes, you can achieve that by simply boosting your sales and marketing department instead of purchasing a competing enterprise. Nonetheless, you will need proper financing to ensure that the individuals you add to your marketing sector are well compensated. Mezzanine financing is an ideal option if you do not have the funds to cater to your company’s financial needs.
What Is Mezzanine Funding?
This type of financing is a mixture of equity and debt financing that allows the lender to convert it into equity interest if you default on the blending. However, this is only possible after settling the debts for senior lenders, such as venture capital firms. The name mezzanine comes from the fact that these funding types have risk levels that fall between secured loans from banks and alternative lenders and venture capital from investors who have staked in your business. Mezzanine financing comes at a higher interest rate but is cheaper than private equity.
How Does This Funding Benefit You?
You Experience Exponential Growth
One thing to note about mezzanine financing lenders is that there are primarily long-term investors and not individuals or companies looking to make a quick killing. In that case, they help your company grow with time because they are pretty experienced at designing strategies that maximize long-term value.
There Is Less Interference From Lenders
You will experience minimal interference from mezzanine funding lenders in the control you have of your company and the direction it takes. That is because most of these lenders are passive.
It is Cheap
You do not want to spend all your revenues clearing debts. Mezzanine lending is a cheaper option for selling your enterprise’s shares to investors or raising capital.
You Get Higher Loan Amounts
In most cases, you will realize that the amount you get from this funding type is always higher than you would get from a traditional bank loan or asset-based lending. You can even get twice or thrice of your cash flow amount.
Today, there are several financing types to help businesses grow and take advantage of investment opportunities. Feel free to contact Jasema Capital today for any financial advice and assistance you require.