Subordinated loans, also called mezzanine financing, rank after bank or other financing. This means that in the event of the borrower failing, the subordinated loan can only be repaid after the bank or other senior financing has been fully repaid.
This type of loans is often used when a company or a group will have a temporarily increased debt ratio because of certain expansion plans, planned acquisitions, etc. In the company’s business plan, the debt ratio falls rapidly because of increasing revenues after implementation of the plans. In this scenario, traditional financiers do not wish or are unable to take on these risks in the initial phase, thus creating a financing gap that shareholders in turn cannot or do not wish to fill entirely with capital.
Our subordinated business loans offer a good solution to this problem because they combine elements of a loan with those of a capital contribution. Thus, we provide permanent medium-term financial resources that strengthen the company’s equity and solvency. Due to the subordinated character, these loans carry a higher risk and therefore also a higher remuneration. However, the loans do not dilute the existing shareholders, or only to a limited extent.
Depending on the type of subordinated business loan that we can offer you, additional criteria or benefits may apply. Our investment managers will be happy to explain these in a personal meeting.