Mezzanine Loans, Bridge Loans, Due Diligence Documentation & Development Finance Consulting

A good question and one that the Rainmaker consultants field quite frequently.  Basically, a mezzanine loan is used as near-term (three (3) years or less) funding measure for developers seeking to create additional financial investment leverage by using the mezzanine to replace the capital contributions the developer would otherwise make to the transaction.  Let's be very clear on this point - mezzanine loans replace the capital you have in your hands and not capital that you do not have in your hands.  If you are seeking to acquire additional equity investment then you have the following choices to consider:

1. Shelve the project until you have enough funds to cover all contribution requirements your project may have regarding at-risk equity and capital contributions; or

2. Undertake a private placement offering of equity securities to raise the funds necessary and thereby accept a potentially massive dilution of your ownership interests in the project; or

3. Undertake a private placement offering of equity securities that are based upon some investment incentive entitlement the project may qualify for at the local, state and/or federal level.

The third choice is the most common one the developer usually seeks to implement.  The entitlements review should have been undertaken in the course of the market feasibility study's completion.  If this is not the case, then consider having Rainmaker complete the investment incentive entitlements review without delay.  It costs far less than a mezzanine loan application fee and can offer you the opportunity to utilize these incentives to provide your project with the equity financing (gap financing) you really need.  Rainmaker offers a comprehensive capital funding plan approach that will help you maximize your opportunity for funding success.