Mezzanine loans are often referred to as cash flow or unsecured loans when Banks are referencing a funding structure, particularly when they are considering a company acquisition or MBO/MBI. Typically the loans will be classed as highest risk (they will almost always not be covered by any tangible security) and will therefore attract a much higher interest rate and will invariably require the new shareholders/directors to provide unsupported Personal Guarantees. There really is no set formula on how these loans are viewed but currently (2012) the banks/lenders are considering a mezzanine facility needs to be justified by between one and two years positive cash flow, i.e. if your business is generating an EBITDA figure of £750,000 per annum - and it can be demonstrated this is sustainable - then the banks will consider a loan of up to £1,500,000.
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