Alternative Business Financing

February 1, 2016

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Standard-mezzanine programmes burst alternative corporate financing over the issue of private mezzanine capital are as burst possibility of corporate financing increasingly attractive standard-mezzanine programmes; Banks deny much-needed financing alternative corporate financing, in particular over the issue of private mezzanine capital are becoming increasingly attractive as a way of business financing. The traditional bank financing was years ago for most small and medium-sized companies often additional investment capital to generate the only way, alternative means of financing for many such companies have become so everyday. So which increases the equity ratio by its balance sheet-shortening effect and thus paves the way for the additional equity capital or even foreign borrowing used on the one hand, in addition to various funding programs that are regional or also on the actual business part, increasingly factoring or leasing. The others were straight- in recent years – by many companies in addition mezzanine financing used. Mezzanine capital can be designated as foreign capital, as well as equity capital comes from the Italian term \”Mezzanine\” and referred to the mezzanine in the midst of two main storeys in the architecture.

In corporate finance, mezzanine capital for financing, which, as the architectural origin suggests – balance sheet occupy a position between the equity and the debt stands the name. Mezzanine capital is a collective term for all so-called hybrid (= mixed) financial instruments, which is a pure equity versus the pure debt capital. The design of mezzaniner financial instruments can be both close to foreign capital (\”debt mezzanine\”), E.g. in the form of a subordinated loan with a fixed or variable interest rate, as also equity capital close pronounced (\”equity mezzanine\”), in form of (atypical) dormant holdings, profit participation rights or value securitised paper genus notes. Added Mixed forms such as convertible and warrant bonds, providing both equity and debt instruments. While debt although economically representing mezzanine equity, balance sheet but foreign capital is mezzanine equity also extended to include equity or equity capital replacement, which strengthens the equity ratio, corresponding design is tax but still treated like foreign capital.