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Mezzanine Finance

Deedle can help you get Mezzanine Finance today. This type of business loan involves both debt (a loan) and equity (giving up shares in your business). You can borrow up to 90% LTV and better yet, all credit histories are considered!

Our expert team can help you secure competitive rates across the UK, Scotland and Wales. You can access funds within 2 to 4 weeks, and borrow money for up to 10 years. To get a free quote, simply fill in our form to speak to an advisor today!


Secure Mezzanine Finance Today With Deedle

How Does Mezzanine Financing Work?

Step 1
Company Evaluation & Agreement
The company seeking additional capital evaluates its financial needs and growth prospects. The mezzanine finance lenders conduct due diligence to assess the company’s risk and potential returns. Both parties agree on terms, entering into a mezzanine financing agreement.
Step 2
Issuance of Subordinated Debt
The company issues subordinated debt, a portion of the capital required, with a higher interest rate than traditional loans. This subordinated debt ranks below senior debt in terms of repayment priority, providing flexibility in repayment terms.
Step 3
Equity Investment
The lenders will also receive an equity stake of the project or the company, aligning their interests with the company’s performance.The equity component compensates for the higher risk that is associated with mezzanine financing.
Step 4
Repayment Structure
The borrower makes periodic interest payments on the subordinated debt, through cash or payment-in-kind (PIK) interest, as well as through shares in the company. The repayment structure is flexible, with the principal amount due at the end of the agreed-upon term.

What Is Mezzanine Financing?

Mezzanine financing is a hybrid form of capital that combines elements of both debt and equity. It is typically used by companies to raise funds for a property or business investment.

Mezzanine finance involves issuing subordinated debt, which ranks below senior debt, along with an equity component, offering investors greater flexibility in repayment terms and potential returns. This means that the company will pay interest and also give the lender a small stake in the project or opportunity in exchange for the loan.


Can You Give An Example Of Mezzanine Financing?

Let’s say you want to raise £8 million and you have agreed a loan for £5 million with a standard lender. Through a mezzanine loan agreement you might secure another £1.5 million and will need to put in £1.5 million yourself instead of the initial £3 million. As part of this agreement, you would be using debt (a £1.5 million loan) and also be giving up equity (a share of the profits).

Alongside mezzanine finance, there are also other financing options you can consider. Examples include bridging loans, development finance or working with private investors.

Why Do Borrowers Use Mezzanine Finance Providers?

Borrowers, who may be lacking sufficient funds for their project or business, may wish to take out a mezzanine finance loan to give them the necessary capital they need to grow their company. Common reasons to use mezzanine finance include for property developments, bridging loans, management buyouts, funding growing businesses, recapitalisation and for organic expansion.

This type of funding may be considered when an opportunity is considered too high risk for a traditional lender or a borrower cannot afford the loan. In this case, mezzanine financing may be viable because it means that the lender also gets equity in the business. So although it may be a high risk investment for the loan provider, the returns could be very lucrative due to the shares they have accrued.

Mezzanine finance is also used to top up existing loans. If a lender has already provided a loan for an investment opportunity but the borrower still needs further funds, lenders may understandably not wish to lend out any more money. However, they may be more inclined to do so if they get a percentage of the potential profits. For instance, they may provide 50% of funds in a loan form, 25% as equity and then the borrower has to put in the remaining 25% of the funds needed.

Get Competitive Rates For Mezzanine Financing

Why Should I Apply With Deedle?

Deedle can help to secure mezzanine finance for your business. We work with a number of reputable mezzanine finance providers across the UK, Scotland and Wales.

We can help to source loan amounts ranging from £50,000 to £25 million. There is the option to receive the bank transfer in one lump sum or in stages so that it can be used during different parts of the project.

We pride ourselves in offering exceptional service, with valuable advice on the best way forward and how to get the most competitive rates and terms possible. So what are you waiting for? Simply enter your details into our form and Deedle will come back to you with more information.


What Are The Mezzanine Financing Terms?

Mezzanine finance is typically treated as a simple loan for a certain duration, for instance 1 year. The loan is either repaid in one lump sum or interest repayments can be deferred.

If the borrower has not reached their targets within the agreed timeframe or they are unable to repay back the loan on time, it can trigger a clause in the contract which means that the lender will get equity in the business instead. This means that the borrower will have to give up equity in their company to the loan provider as a form of debt.

What Are The Eligibility Requirements For Mezzanine Finance?

You must be:

  • Based in the UK, Scotland or Wales
  • Willing to offer up to 20% in equity
  • A limited company

All properties are considered, including both commercial and residential. As well as this, all credit histories are considered too.

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Frequently Asked Questions About Mezzanine Finance

What Is Mezzanine Finance?

Mezzanine finance provides an effective way to borrow money for expansion, acquisitions, developments or any other strategic initiatives. It enables companies to secure funds when their project has significant growth potential but is also high risk.

How Much Equity Do I Need To Put In With Mezzanine Financing?

The amount of equity that you will need to put in varies between lenders. Typically, the amount ranges from approximately 5% to 20% of the overall project costs.

What Are The Advantages Of Mezzanine Financing?

Mezzanine financing offers several advantages, including greater flexibility in repayment terms, often incorporating payment-in-kind (PIK) interest, allowing companies to capitalise interest payments. Additionally, the combination of subordinated debt and equity components provides a versatile financing option for businesses seeking capital for expansion or strategic initiatives.

Is Mezzanine Financing High Risk?

Mezzanine finance can be high risk for borrowers because they have collateral at risk and are giving away shares of their company. However, it can yield higher returns than other forms of finance if carried out successfully.

In What Way Is Mezzanine Finance Different To Senior Debt?

Senior debt is a company’s first tier of liabilities and is secured against a property, for instance a mortgage or original investment. If the project or business does not work out, the senior debt (usually to the bank) would be paid first and the mezzanine finance would typically be the second form of debt, known as junior debt.