Guide to Mezzanine Lenders

Turn to mezzanine lenders to finance a large project quickly
By Linda C. Ray

Mezzanine lenders are investors who see the potential in your project as clearly as you do and are willing to put up hard money for a stake in the project. Most mezzanine loans are made by real estate mezzanine lenders who buy in for a share of the stock in the property, as well as both real and residual profits.

Mezzanine loans are typically based on the practicality and profitability of the project and not on your credit rating. They can be done with little due diligence and are very safe for the mezzanine financing lenders, who can foreclose on your stock in a matter of days if you miss any payments. Turn to mezzanine lenders for capital to:

1. Leverage equity with a mezzanine lender for an existing real estate project

2. Purchase a dormant office building that has huge potential with real estate mezzanine lenders

3. Build a hotel on a hot property through mezzanine loans

Action Steps

The best contacts and resources to help you get it done

Turn to mezzanine loan providers for quick cash to grow your business While you may not have enough equity in a property to get a decent line of credit from a bank, a mezzanine lender can cover your cash needs quickly in return for a high note in stock if you default on the real estate mezzanine loans. A mezzanine loan will show up on your financials as an investment rather than a debt, making the deal even sweeter.

I recommend: Agape World offers low rates for bridge loans secured by stock that meets the mezzanine loan definition. Commercial Lending Group is a worldwide provider of real estate mezzanine loans with a quick online application.

Draw upon your experience to secure mezzanine loans Often, an experienced real estate developer can attract eager mezzanine loan providers based on a successful history of picking winners. A seasoned developer can see potential in a poorly managed property and receive a large percentage of the capital to purchase the property from real estate mezzanine lenders.

I recommend: American Capital is an international mezzanine lender always looking for pros with whom to partner. Gelt Financial specializes in commercial and investment properties as mezzanine financing lenders.

Get a payoff for your keen sense of timing for a new hotel development with mezzanine lending When the financial markets are soft in a particular industry such as hotel development, international mezzanine lenders and local mezzanine loan providers are more willing to take the risk and reap the bigger rewards with you. Look for mezz lenders who take the big risks and will trust your track record.

I recommend: Ocean Pacific Capital can act as a conduit to help you find the right real estate mezzanine loans for your hotel development. Private Equity Info provides an in-depth database of mezzanine real estate lenders.

Tips & Tactics

Helpful advice for making the most of this Guide

Beware of the smooth talkers in the mezzanine lending companies who make promises that sound too good to be true. There is a price for every loan. Be sure to enter into the agreement fully aware of all the consequences of a default.