Mezzanine Finance
A development funder providing the majority of total project costs on a first charge basis is known as the “senior” lender. If a developer is not able to contribute the balance of monies required by the senior debt provider, mezzanine finance can often be used to fill the gap.
Mezzanine finance is provided by specialist funders on a second charge basis, “topping up” a senior debt facility to complete the finance package. As the mezzanine funder will rank behind the senior debt provider in terms of his security, the cost of mezzanine finance is higher due to their increased risk, and often a mezzanine funder requires a profit share on a Joint Venture basis.
Typically, senior lenders will advance up to 70% of project costs, subject to a maximum limit which is expressed as a percentage of Gross Development Value (GDV). Mezzanine funders will generally provide 20% of project costs, meaning the developer only has to contribute 10% of project costs.
Mezzanine finance has become a lot more commonplace of late due to a combination of senior debt providers increasingly limiting their levels of exposure and developers lack of liquidity in general. As such, structured funding packages which include a combination of senior and mezzanine debt are highly sought after.
Positive Commercial Finance has access to a number of reputable mezzanine lenders throughout the country, in addition to our plentiful supply of senior debt lenders.
Loans from £100k to £10m
Up to 90% of total project costs, generally subject to a maximum of 70% of GDV
Up to 18 month terms
Terms vary. Contact us for details.
