If you have ever taken out a car loan or residential mortgage loan, chances are you are familiar with some of the basic loan terminology that is used. When it comes to commercial real estate (CRE) loans, the vocabulary opens up and even more terms are used that you may not be familiar with.
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What is Commercial Mezzanine Financing?
There is an order or hierarchy to this type of financing. If you picture a pyramid or triangle, the bottom section represents the senior debt which provides the majority of the financing, the middle section is the mezzanine financing which is the financing that fills the gap between senior debt and equity, and the top of the pyramid is equity financing (the sponsor’s contribution).