Mezzanine funding is undoubtedly a perplexed term for most of the investors and due to its confusing concept a big number of investors do not invest their money in this business. To make it simplify, the seniors of CRE Finance, LLC are going to help you.
After the downfall of property in 2008, the financial market of United States and of most of other countries happened to be changed for a certain period of time. The concept of mortgage loan had grossly affected and most of the banks were not available to grant money over your property. It was the reason that the flow of real estate investment happened to roll in its opposite direction and the vacuum created by the gap was started filling through other forms of financial sources. Mezzanine funding (Mezz funding) was one of those sources.
Actually, this funding is a type of hybrid funding where the lender covers their capital investment risk by being able to convert their financial stake in the property into an equity interest in that same property.
It must be looking good, but, do not forget that this funding has also some gray areas. Exactly, to cover risk on capital investment, most of the lenders set their return price on Mezzanine funding too aggressively and you are supposed to pay 15% to 25% interest on the amount you wish to borrow.
No doubt, there are plenty of options to get funding for your business but the atrocities and problems involved in those options should not be taken so likely. Take for the granted, if a company wishes to sell some shares or borrowing some money on those shares, how many shareholders will create problem for the company? However, most of the people look for Mezzanine funding. And, they know that there is no risk their business, lender or to themselves.
Of course, lenders will not give this loan to all and sundry. To get this loan, one has to show 3 years consistent cash flow of his business otherwise the lender would not grant the loan. So, if you are looking for some capital and intending to borrow the money without facing any trouble then Mezz funding would be the best option for you.
