個案總覽

A mezzanine financing package may be the right thing for a small business that is having trouble finding long-term capital to finance its growth. Mezzanine loans are flexible. In most cases the lender provides from $500,000 to $5 million in subordinated debt over a five- to seven-year term at an interest rate costing no more, sometimes less, than senior debt. In exchange the borrower gives the investor warrants to purchase a small amount of the company's common stock--usually 5% to 15%--at a later stage. For lenders, mezzanine loans provide a higher total rate of return than most conventional loans because of the equity feature. For businesses, they provide affordable long-term debt without diluting the owners' equity.

The matching principle says, "Don't finance long-term needs with short-term capital." Small businesses, however, rarely use strict matching. By not adhering to the matching principle, small businesses incur three risks. First, when loan-renewal time comes, interest rates can be higher. Second, a lender may decide to terminate the agreement. Last, a lender might begin to make operating "suggestions" that limit the company's autonomy if payments are not met in time. To deal with these risks, small businesses that use some amount of short-term capital to finance long-term requirements need to be flexible enough to eliminate the debt in a reasonable period of time without disturbing operations.