Mezzanine financing is a powerful tool for project funding that is often overlooked by developers and investors. This type of financing is a hybrid between debt and equity, and can be used to fill the gap between the amount of senior debt financing and the total amount of funding needed for a project. In this article, we will explore the benefits of mezzanine financing and how it can be used to fund projects.

Mezzanine financing is a form of financing that sits between senior debt and equity. It is typically used to fund projects where the amount of senior debt financing is not enough to cover the total cost of the project. In these cases, mezzanine financing can be used to fill the gap. Mezzanine financing is typically more expensive than senior debt, but less expensive than equity.

One of the primary benefits of mezzanine financing is that it can help developers and investors fund projects that would otherwise be too expensive to fund with just senior debt financing. Mezzanine financing can also be a great way to leverage the equity in a project. By using mezzanine financing, investors can increase their returns while minimizing their exposure to risk.

Another benefit of mezzanine financing is that it can be structured in a way that is beneficial to both the borrower and the lender. Mezzanine financing can be structured as a loan or as a convertible note. If structured as a loan, the borrower will have to make interest payments to the lender. If structured as a convertible note, the lender can convert the note into equity at a later date.

Mezzanine financing can also be structured in a way that is beneficial to the lender. Mezzanine financing is typically secured by a lien on the borrower’s assets. This means that if the borrower defaults on the loan, the lender can take possession of the borrower’s assets. This provides the lender with an added level of security.

In conclusion, mezzanine financing is a powerful tool for project funding that can be used to fill the gap between the amount of senior debt financing and the total amount of funding needed for a project. Mezzanine financing is typically more expensive than senior debt, but less expensive than equity. It can be structured in a way that is beneficial to both the borrower and the lender and can provide the lender with an added level of security. At GILKO CAPITAL, we have extensive experience in providing mezzanine financing and can help you explore this option for your project funding needs.