$500K-$700K of Mezzanine Debt

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by a searcher
in New York, NY, USA

1yr ago

$500K-$700K of Mezzanine Debt

I have a Commercial Services business under LOI (~$1.5M in EBITDA) with the deal currently being financed by a combination of Seller Note and Investor Equity (i.e., no SBA). Are there any lenders that would look at providing $500K-$700K of Mezzanine Financing that sits under the Seller Note? Terms are flexible. Please comment if you'd like me to reach out.

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reply by a lender 1yr ago
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

When you say under the seller note, do you mean the lender would have the first lien on the business assets or the seller note would have the first lien?

reply by a searcher 1yr ago
from Bowling Green State University in Surrey, BC, Canada

Typically the seller note is subordinated to the bank. I can't imagine a sub-debt lender would want to be behind the seller. Plus, the dollars are likely too small to justify the effort on behalf of the mezz. lender if, somehow, they did get comfortable.
I would say you'll either want to a) raise a bit more equity to close the gap, or b) get a proper senior bank to come in with a loan while moving the seller note into that sub. position.