In today’s fast-paced business and property development environment, facing funding limitations from big banks is not
only frustrating, but it also has the potential to ruin a profitable deal.
The inherently skittish nature of the finance industry can wreak havoc for loan applicants and those who need financing
on time. A firmly established lending facilitator, like Quantum Finance Australia, can be the difference between a
successful undertaking and a wasted effort.
What is Mezzanine Finance?
Mezzanine financing is a flexible form of funding that enables developers to secure the necessary capital to move forward
with projects, acquisitions, or real-estate ventures. Mezzanine financing is usually a great form of money when a larger
financial institution limits a loan amount. It is often considered a hybridisation of a bridge loan but departs from the
traditional bridge loan in several ways.
Difference from a bridge loan
Bridge loans exist to span gaps in funding in the short term until a permanent source of funding becomes available. Typically, a bridge loan will have terms spanning between several weeks to several months. A bridge loan requires some form of collateral such as property.
While a mezzanine loan serves a similar purpose as a bridge loan, a mezzanine loan has different terms. A mezzanine loan will fill in financial gaps for property developers and small or medium-sized businesses, but the length of the loan may extend well past the typical bridge loan. Mezzanine funding can transfer equity of borrowers investment or business endeavour in the event of no payment.
Areas we cover
There are numerous sectors and situations for which mezzanine loans are exceptionally well suited.
- Property Development Projects
- Real Estate Sectors
- Gives more control in specific lending circumstances
- Increase Internal Rate of Return (IRR)
- Most of the cost is taken from profits
- Flexible negotiated terms and often easier to acquire funds
- It gets deals over the line
- The Mezzanine Lenders may offer advice and assistance
- Mezzanine lending doesn't just include significant developments
Sectors showing growth
with Mezzanine Financing
Australia’s property development market is a place where mezzanine loans continue to grow. As a response to the stricter lending policies put in place by the big four banks, mezzanine financing is an increasingly attractive option. Even though there is a cooling off in housing prices, the tighter regulations will still point borrowers to seek mezzanine loans. Additionally, the alternatives to mezzanine financing are not appealing. Most borrowers prefer to avoid adding joint venture partners and letting go of some control in their own business.
What is Mezzanine Finance?The benefits
Mezzanine financing makes sense for numerous property developers. Mainly because it allows for forwarding movement
even when traditional funding is unavailable. The top advantages of obtaining this type of financing include:
- Property Developers retain most, if not all, of the control over the company.
- Mezzanine lenders offer flexible loan periods.
- Borrowers often enjoy the advantage of access to flexible amortisation schedules.
- Lenders often choose to invest in the company allowing further growth.
- Because mezzanine lenders maintain their support in a company, the value of the company and its stocks increases.
Why choose us
- We can expand and grow with our clients.
- Quantum Finance Australia representatives see you and your business as more than another transaction.
- We will tap into our strength to help meet your needs.
- Everyone in our organisation has extensive experience in multiple facets of the finance and investing arenas.
- Our excellent history of providing financing for years not just for financial cycles.
- We stand behind our clients and encourage long-term goals.