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Businesses that do well expand over time and this invariably requires additional capital. Additional funds may be needed to complete a project or to purchase and develop a property. In any of these scenarios, mezzanine finance is an option if you can't secure all the funding from a bank.
If you are approved for a bank loan but the amount doesn't cover your total costs, or if additional costs to finish your project crop up, you can consider mezzanine finance. While the money you borrow through mezzanine financing will generally attract higher interest than conventional loans, you will get access to that much-required capital.
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An unsecured business loan with online application and no upfront or early repayment fees.
Mezzanine finance is typically used to fund property projects or complete expansions. If additional costs are incurred during a project and your bank loan won't cover it, you can take out a mezzanine finance loan and secure it to your property. Unsecured loan options are also available. The loan you're approved for is typically based on the property's assets and the equity that is projected from the completion of the project.
If you're looking for mezzanine financing, take into account that lenders will look at factors such as profitability, your business track record, and viable plans for expansion. If you are not able to pay the borrowed money back in time, the lender can claim equity interest in your company or even a right to ownership.
While mainstream lenders normally shy away from providing mezzanine finance, you still have numerous options to choose from. Keep the following guidelines in mind:
If your business has a few outstanding invoices, invoice financing can help get you some additional funds and manage your cash flow. It's a type of business loan that is secured by the unpaid invoices and comes with reduced risk, no asset requirements or interest payments.
Compare invoice financing products below.
Before you apply, make sure you have a thorough plan of action in place to repay the money. If you don't keep up payments, you can potentially lose your business. Avoid paying unnecessarily high interest by comparing a wide range of mezzanine finance lenders. If you notice higher fees and charges, see if other lenders are able to offer you more competitive terms. Don't agree to the loan without going through the associated terms and conditions carefully.
Who can get mezzanine finance?
As lenders tend to look at keeping risk to a minimum, make sure you have as much information about your business and your project as possible. If you can provide around 40% to 50% of your project's total costs, you might qualify for mezzanine finance.
Can I repay the borrowed money ahead of time?
In most cases you can pay the borrowed money off before schedule, but find out if doing so attracts any penalties.
How much money can I borrow?
The answer to this depends on the lender you approach, as most have varied minimum and maximum lending limits.
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