First Business

Mezzanine Financing Defined

Mezzanine financing is a type of debt financing whereby a company issues debt that the holders may convert into equity if the debt is not repaid in due course. This debt carries a high interest rate, as there is little or no collateral, but it is low-risk compared to other forms of debt financing because of its convertibility. Mezzanine financing is listed on a company's balance sheet as an asset; some companies use mezzanine financing because it makes it easier for them to obtain financing from other sources. Mezzanine financing is sometimes associated with leveraged buyouts. (source:

Mezzanine Financing with First Business

  • First Business offers its clients Mezzanine Financing through a strategic business partner, Aldine Capital
  • Fills the financing gap between owners' equity and traditional bank financing, where the maximum bank loan might be capped by collateral requirements.
  • Obtain unsecured debt financing based on cash flow rather than traditional collateral.
  • Increases balance sheet strength by adding needed capital.
  • Reduces ownership dilution (as compared with other forms of equity financing).
  • Opportunity to repay the debt and purchase any equity from the mezzanine lender at a pre-arranged time and place.
For more information, please see our strategic business partner's website at

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