Mezz Options in the ~$500K range?

February 10, 2026

by a searcher from St. Petersburg College in Tampa Bay, Florida, USA

Hi all, I'm evaluating options for a deal under LOI, I'm currently in talks with investors but the deals DSCR is sufficient enough that it can support a relatively small Mezz Strip of ~$500K to bridge the funding gap I currently have. Is this common, or available? I don't know what sizes are normally available and if anyone has any references for this type of funding (not a bank) - happy to evaluate all options!

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Reply by a professional
from Liberty University in New Smyrna Beach, FL, USA

"Common" - No. "Available" - Maybe... here's what to know: When you talk about Mezz, there's not just one financial instrument but the entire category of subordinate debt: riskier than senior loans, but higher priority than any equity stake. There are a bunch of ways mezz lenders evaluate deals, but here are the most important questions to answer: 1. Why isn't this piece of the capital stack suitable for a larger senior loan? Is your senior debt constrained by LTV, DSCR, or something else? 2. Likewise, why shouldn't this $500k slug be syndicated to investors? Because you're trying to keep 100% control, or because the returns don't appeal to investors? 3. Getting a bit more technical here, but what is the planned "as-stabilized" *debt yield*? As-stabilized meaning when the deal is fully cash flowing (usually somewhere between years 2-4 on your financial model). 4. Who is involved in your equity group? Both the financial profile AND, even more importantly, the *track record* you have as an operator with this type of business. 5. Who is the senior lender and do they typically allow subordinate debt? Would they be prepared to execute an intercreditor agreement? If you have solid answers to these, then yes, there are a few groups that underwrite mezz debt of this size, subject to the other standard lender matching questions (location, business plan, everything a senior lender would want to evaluate. I know some of them, but wouldn't make an intro unless/until these bases were clearly covered. But hope laying out the thought process is helpful!

Reply by an investor
from University of Pennsylvania in St. Louis, MO, USA

I think Tim Milazzo's comments cover the key issues. The deal size is likely too small for many lenders and your audience is, therefore, limited to those groups who you may get introduced to through your network and investors. I've seen local/regional business development agencies (quasi-government agencies) that will invest this type of security in companies in their region - job promoting type investments - that could be an alternative to consider as well. But the key issues Tim Milazzo highlights - and answers to these - will help clarify the target audience you're likely to go to. Good luck!

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