Mezzanine Finance - Maximise Borrowing Potential For Your Business

Posted by Challis Capital on November 28th, 2019

Financial services offer capital delivery to the corporate and property developer people who are looking to grow their business and seeking financial help. People like property developers are frequently in need of money to increase their borrowing capacity against any property development. If you own good quality assets, then it will surely help you to maximize the chances of getting required property development finance against your quality assets.

Mezzanine Debt offers a greater amount of fund services including several other benefits to the borrowers such as back-ended payments, longer-term benefits, Long-term focus and flexibility to control all financial activities of the company.

Many Mezz debt service providers offer direct lending opportunities to the companies that have a looking for funding supports. To make such deals, the business owners have to directly contact to the mezzanine lender. The return policy to the lender is based on the future profit value of the company.

There are many important facts to know about mezzanine debt borrower should know before applying it-

1. To receive 100% of the funding, one should have the business’s good strategic and financial presentation in front of the mezzanine community.

2. The creditworthiness of company is equally important which is almost based on the stability of its cash flow over time.

3. The mezzanine loan amount is actually a multiple of the Company's EBITDA. It’s better to have a lower multiple, where higher multiple shows more risk.

4. To get returns back, Mezzanine lenders concern with principal amount, interest rates and upside on their warrants.

5. Mezzanine debt is not so secure financing option as compared to the bank in the company's capital structure as it doesn’t offer any security to assets and loan amount.

6. If the borrower successfully builds up profit for his business in the first 2 to 3 years, he can repay the loan in a short time or refinance it easily.

7. Mezzanine debt does not ask the business owner for a personal guarantee. Instead, they have charged proper interest rates to get a sufficient return over the loan risk.

Challis Capital is the trusted Australian Finance firm known for providing Development Finance, Stretched Senior Finance,Commercial Property Loans, Corporate Advisory, Credit Enhancement, Preferred Equity  solutions and more to its customers. For more details, visit https://www.challiscapital.com.au/