In its purest form, Mezzanine Debt is a business debt instrument that carries along with it certain rights to convert debt into equity (stock, common shares, partnership interests, LLC membership units, etc.). Mezzanine debt financing is not a pure debt or a pure equity instrument. It is something in the middle. In fact, the word ‘mezzanine’ is derived from the Italian word ‘mezzano’, meaning middle, and is used to describe how this particular form of business capital combines elements of both debt and equity financing into one instrument. It is used typically when a business is in a high growth environment and needs more capital than it may borrow from a traditional lender.





Comments


Written by tiroberts
3694 days ago

This is something I hadn't given much thought to but I'm glad you laid it all out in this article. Thanks.



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Share your small business tips with the community!
Share your small business tips with the community!
Share your small business tips with the community!