- This topic has 1 reply, 2 voices, and was last updated 7 years ago by
.
- Posts
Is mezzanine financing a fancy word for convertible debt? And also can you give me one very simple example of bridge financing? Thanks in advance
No – mezzanine financing is unsecured debt borrowing.
(It is called mezzanine because in the event of liquidation it ranks below secured debt, but above equity, in the order of payout)Bridge finance is a short term loan. I will give you two examples! Suppose a company is arranging a long-term loan but it will take a month to arrange and they need the money urgently. They might take a short-term loan for the month and repay it when the long-term loan gets arranged. Most common in the UK is for individuals selling one house and buying another. The might need to pay for the new house before they get the money from the old house, so they take a short term bridging loan for the period.
Bridge finance is usually at pretty high interest rates.
- The topic ‘Mezzanine financing’ is closed to new replies.