Mezzanine Loans
There is a lot of confusion as to what exactly is a Mezzanine Loan.
To those on Wall Street, a Mezzanine Loan refers to the grade of the debt being incurred when seeking financing. The grades range from high quality investment grade debt that can be securitized and sold on Wall Street to the poor or low quality debt instruments (known as junk bond grade).
Somewhere
in the middle is the Mezzanine Grade. The term takes its name from that part
of a structure, such as a theatre--the Mezzanine. Its quality is
not investment grade, yet good enough to warrant those not regulated by
governmental oversight to make loans, and at rates not as high as charged in
Hard Money Loans, but at rates higher than charged on prime loans.
To confuse the concept even further, the real estate industry uses the term to
mean:
"A loan given in addition to the first mortgage in lieu of a second
mortgage on real property. The Mezzanine Loan is made to the principals
or partners of the mortgagor, which is secured by a pledge of their individual
interests in the mortgagor under filings consistent with the Uniform
Commercial Code. The Mezzanine Lender making the loan, which is not the
first mortgage lender, has as the primary collateral for the Mezzanine
Loan a claim solely against the mortgagor's equity interests in the
collateral."
A Mezzanine Loan is a useful tool for making permanent financing possible, for
it bridges between the equity you have available for a particular project and
the amount of equity necessary to secure permanent financing.
Quite often an excellent opportunity comes along that has great financial potential, but a prospective buyer lacks the cash to provide the equity or down payment required to secure a conventional real estate loan.
Capital Funding of American can provide that additional equity that you need to make that great opportunity come alive.
If you have such an opportunity, but need the additional equity financing to make it work, give us a call. An answer can be had very quickly, and you will be able to take advantage of that great opportunity.
To see a sample of our commercial loan programs and rates, including Mezzanine Loans, please use this link: Commercial Real Estate Loan Rates.
Contact us toll free at 1-800-322-5985 or use this link to our CONTACT US page to arrange for this unique type of loan.
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