Are you considering a mezzanine debt for your business? There are many things that could happen if you take out a loan to fund your business venture.
Getting into debt can lower your credit score if you can’t keep up with your payments and worst, you may have to declare bankruptcy when it becomes harder to repay your loans because you’re not getting enough profits. So, whether you want to expand or to simply prepare for merger and acquisition, getting into debt is a serious matter that needs consideration.
One way to avoid this is to make sure that you have the right reasons for getting into debt. It may appear that your business needs it in order to leap, but if you cannot see any direct impact on the revenues, it’s time to think again.
Here are some of the few reasons that could justify your plan of applying for mezzanine debt or any other business loan.
You need to purchase equipment to improve your business offering. It is not just one of the nice-to-haves equipment, but one that your business actually needs, immediately. A particular tool may not be worth the high interest rates that go with mezzanine debt. So, think twice before you buy equipment and ask yourself if it can be considered as one of the best investments of your business.
The return on investment of the business opportunity outweighs the cost of the loan. If you need a quick bundle of cash to get discounts on inventory, expand your market or any opportunity that is just too good to pass up, then getting a loan is worth it.
Or, if your company is in danger of losing more than what the loan could cost you, getting the bright financing to cover the expenses could help you prevent more losses.
You are in urgent need of cash
“Mezzanine debt” is any temporary loan you take while waiting for long-term financing. You can use it to buy products that you would eventually sell. In short, it is a loan you take for an urgent need and you plan to pay it off as quickly as possible. It is commonly used in acquisitions and mergers.
A good example is when your firm is purchasing a $50 million business and Lender A provides you $30 million. Then you secure mezzanine financing from Lender B for $10 million and puts in $10 million of your own money for the buyout. By doing so, you leverage your return by contributing less money to the transaction.
Mezzanine debt and short term business loan
A good alternative for mezzanine debt is short term business loan. ALC Commercial offers fast short term financial support to small businesses which is particularly helpful to those applicants who cannot provide financial documentation, and those with bad credit history.
Short term business loans are usually approved within minutes over the phone or after filling up an online enquiry form and you can get the proceeds of the loan within 72 hours. By getting a short term business loan which is quickly approved and deposited fast into your account, you can fix your cashflow problems while waiting for your revenues to improve.
Boost your business’ finances, pay for stock and equipment, emergency repairs and other startup costs with ALC Commercial’s short-term business loans, a better alternative to mezzanine debt.
Contact ALC Commercial today to get the right loan solution to get your business through any financial hurdle.