The choice to request mezzanine capital has many advantages. However, you need to be patient and wait for a while.
- It fills a financial gap and provides a capital base to carry out corporate projects
- Improves the balance sheet structure and therefore solvency (positive impact on the company’s rating and financial margin)
- Consolidation of financial equity (no dilution of capital or loss of property rights)
- Interest is tax deductible
- Flexible credit arrangement
- Greater entrepreneurial freedom and the right of the lender of the mezzanine capital to intervene
- Higher costs compared to traditional loans
- In terms of equity, the capital is only made available with a time delay
- Greater transparency requirements
Characteristics of mezzanine capital
It is worth comparing the properties of mezzanine capital with those of equity or traditional loans. Here is an overview.