Mezzanine Finance
Extra Development Funding to Bridge the Gap
Boost Your Development Budget Without Giving Up Control
Short on funds to complete your next project? Mezzanine finance provides the extra capital you need by bridging the gap between senior debt and equity financing, giving you access to up to 95% of your total development project costs.
At Bridging Finance Broker, we arrange mezzanine funding and mezzanine loans that work seamlessly alongside your senior lenders. This allows you to raise additional funds, maintain control over your property development, and keep your project moving from start to finish—all without giving up a significant equity stake.
Our tailored mezzanine capital solutions can include subordinated debt, preferred equity, or hybrid debt-equity financing, helping you manage interest payments, optimize your capital structure, and reduce the risk of equity dilution.
Understanding Mezzanine Finance in the Debt and Equity Capital Structure
Mezzanine finance is a secondary layer of funding that sits behind your main senior debt or development loan. It fills the gap between your senior facility and your own equity investment, often taking the total loan-to-cost up to around 85–95%. This type of mezzanine funding is a flexible hybrid debt-equity finance solution that helps manage interest payments while minimizing equity dilution.
It’s a smart option when:
You have limited equity to put into a project
You want to keep your capital tied up in other development projects
You need to extend your budget without giving up control
We’ll guide you from first enquiry to completion, ensuring your mezzanine loan financing is structured properly, your exit plan is solid, and your funding is secured exactly when you need it.
For projects that need to bridge short-term funding gaps, we also offer land-bridging finance to complement your mezzanine finance, giving you even more flexibility in your capital structure.
Why Use Mezzanine Funding?
Reduce your capital input
Contribute less cash up front
Increase project ROI
Deploy capital across multiple deals
Retain control
Often no profit share or joint venture required
Fast to arrange
Works alongside your main development facility
Who Can Benefit from Mezzanine Capital?
Mezzanine finance is perfect for developers, builders, and property owners who want flexible business funding without giving up control of their projects. It sits neatly between senior debt and equity ownership, allowing you to raise additional funds while minimizing equity dilution and keeping your capital structure intact.
It’s ideal for:
Developers managing multiple projects who need extra mezzanine funding to complement existing debt and cover higher interest debt.
Experienced builders looking to grow their business or fund a business acquisition without giving up significant equity ownership.
Property companies want to make the most of their current equity holders’ investment while maintaining a strong capital structure.
Landowners leveraging site uplift as part of a funding mix, especially when working with assets of relatively high liquidation value.
Mezzanine finance works seamlessly with secured loans or other mezzanine debt, offering flexible funding agreements with manageable interest rates, predictable monthly payments, and options for equity conversion or preferred equity. This makes it easier to meet certain financial ratio standards while keeping the company’s current management in control.
For projects that need extra support, mezzanine finance can be combined with development finance to cover larger funding gaps, refinance existing debt, or fund significant capital expenditures—all while preserving your equity stake.
This makes it particularly valuable for business owners, including family-owned businesses, who want access to borrowed additional funds without compromising control or affecting their company’s balance sheet.
How It Works
You’ll repay both loans from the same exit, sale or refinance, starting with the senior lender.
Senior debt agreed
Usually 65–70% LTC
Mezzanine top-up arranged
Adds 10–25% LTC
Combined facility
Up to 90–95% total loan-to-cost
Key Features of Mezzanine Capital: Rates, Terms, and Equity Financing
Mezzanine finance is a flexible funding solution for developers and property investors seeking to bridge the gap between senior debt and equity financing. It allows you to raise additional funds while maintaining control of your projects and managing your capital structure efficiently.
Loan Sizes and Total Funding
Typical loan sizes range from £250,000 to £5 million+, making mezzanine capital suitable for a wide range of development projects, from smaller refurbishments to larger commercial builds.
When combined with senior debt, total funding can reach up to 95% Loan to Cost or 70% of Gross Development Value, helping you cover construction costs, land purchases, or significant capital expenditures.
Rates and Risk
Interest rates typically range from 12% to 24% per annum, reflecting the higher risk and higher potential returns of subordinated debt.
Repayment is often structured as rolled-up interest, paid after senior debt holders are satisfied, helping to manage debt service, current interest payments, and overall interest costs.
Some mezzanine lenders may structure loans with a portion of preferred equity or a share of profits, offering flexibility while protecting your equity ownership.
Term and Exit Strategy
The loan term usually matches your senior facility, typically 12–24 months, giving you a clear timeline for project completion.
Exit strategies commonly include sale of completed units or refinancing with senior lenders, ensuring your project remains fully funded throughout its lifecycle.
Mezzanine debt holders can provide additional guidance on equity conversion or preferred equity examples, depending on the project’s complexity.
Additional Flexibility
Mezzanine loan financing can work alongside pre-planning bridging finance, ideal for early-stage land purchases or projects needing fast capital.
These loans complement your existing debt or secured loans, giving you the flexibility to manage financial ratios, cover higher-risk development projects, and optimize your company’s balance sheet.
Common Uses of Mezzanine Finance: Debt, Equity, and Business Funding Solutions
Mezzanine finance is a flexible solution that bridges debt financing and equity investment, helping developers access extra business funding while maintaining control. Common uses include:
Increasing available funding without raising additional equity, unlocking more mezzanine capital for your projects
Allowing senior lenders to maintain lower loan-to-value ratios, helping secure better interest rates
Completing the capital stack for larger developments, business acquisitions, or leveraged buyouts
Adding extra funds mid-project when build costs rise, using subordinated debt or mezzanine loans
Supporting higher-risk projects while protecting equity ownership and maintaining a healthy capital structure
Use Our Development Calculator
Want to understand how mezzanine finance affects your total loan, interest, and returns? Use our calculator to explore your options.
Frequently asked questions
Everything you need to know about the bridging finance broker
What is the difference between senior and mezzanine finance?
Senior debt is the main facility secured first. Mezzanine sits behind it—riskier for the lender, but allows more leverage for the developer.
How much mezzanine finance can I raise?
Typically enough to reach up to 90–95% of your total development cost. Your experience and exit plan matter.
Do mezzanine lenders require a charge on the property?
Yes—usually a second charge behind the senior debt. We’ll handle the legal and intercreditor agreement.
Is this suitable for first-time developers?
Usually no—mezzanine finance is designed for experienced developers or those with a strong team and multiple deals under their belt.
Complete Your Capital Stack
Whether you’re maximising ROI, scaling across sites, or protecting your equity, mezzanine finance offers the flexibility to do more with less.