First Business Bank - Milwaukee Introduces Mezzanine Funding
MILWAUKEE, April 25 /PRNewswire/ -- First Business Bank is now offering mezzanine funding to Milwaukee-area clients through an investment with Aldine Capital Fund, L.P. (in Wisconsin and Illinois) to provide funding between $2 million and $8 million in investment size. Mezzanine financing, also referred to as "mezzanine capital" or "junior capital," allows borrowers to obtain unsecured debt financing based on cash flow rather than traditional collateral. It is a tool that can fill the financing gap that often occurs between owners’ equity and traditional bank financing, where the maximum bank loan might be capped by collateral requirements or other limitations. Mezzanine financing is most often used for financing growth, re-capitalization, acquisitions or ownership changes.
Nationally, large corporate banking and investment conglomerates offer mezzanine funding but tend to target investment sizes of greater than $10 million for a single company. "Most companies that offer mezzanine financing tend to focus on larger deals, which leaves a void, especially in Wisconsin, for mezzanine funding under $5 million," says Dave Vetta, President & CEO, First Business Bank - Milwaukee.
"We frequently serve industries where growth and acquisitions create a need for additional funding sources," he adds. "Mezzanine financing is a win- win-win scenario for borrowers, lenders and investors. By offering a funding solution for small- to medium-sized businesses, we feel we are bringing something of great value to the local business community. Furthermore, we believe we are the only Wisconsin-based bank to offer this financing alternative."
Mezzanine funding strengthens a company’s balance sheet by adding needed capital while the provider focuses on existing cash flow in the overall repayment analysis. Some common characteristics of companies funded with mezzanine capital include those with excellent performance histories, experienced management teams, an industry niche and a history of strong customer relationships. Key advantages of mezzanine financing include reduced ownership dilution (as compared to other forms of equity financing) and the opportunity for the business owner to repay the debt and purchase any equity from the mezzanine lender at a pre-arranged time and price.
Each mezzanine deal will be negotiated on an individual basis and could fund investments for projects ranging from the development of technology to business succession. "We saw a need in this market to expand financing options but we wanted to ensure direct access to decision-makers and the fast turnaround we guarantee in our traditional lending services," adds Vetta. Mezzanine funds are currently available.
For further information on mezzanine funding, please contact Dave Vetta, President & CEO, First Business Bank - Milwaukee, at 262-792-7100.
About First Business Bank - Milwaukee First Business Bank - Milwaukee was established in 2000 to provide a full range of commercial banking services to Greater Milwaukee-area businesses and business people. We are chartered as a unit bank with a CEO and a board of directors. This structure allows us to understand local businesses and respond quickly and proactively to meet their needs.