It is to be kept in mind that making the timely payment against the debt is absolutely crucial for your company in case of a mezzanine loan. Provided that your company fails to do so, the lender has the capacity to seize the stock and foreclose on the property. It is imperative to mention here that once the lender gets hold of the stock, he has a complete grasp over the company as well as the real estate property, which was used to secure the primary loan.
As a matter of fact, the loan that is secured by a stock is much easier to be foreclosed as compared to the one that is secured by a real estate property.
It should go without saying that once the lender has a grasp over the real estate property, it can go out and sell the property provided that the primary mortgage has been settled. This is what is normally termed as the streamline foreclosure, which takes considerably lesser time as compared to the standard foreclosure of a particular mortgage.
You are absolutely right in questioning why would an individual prefer a mezzanine loan over the traditional second loan? The fact of the matter is that while a traditional second mortgage asks for a separate real estate property, a mezzanine loan enables an individual or a company to have access to a particular amount of funds without having to secure them with a real estate property. This is what makes it convenient for the companies to get a second loan.
There is no argument over the fact that mezzanine loans are to be approached if your company is planning a huge project, which may include and is not confined to an office tower, a shopping mall, a huge shopping center, apartment complex, large hotel, or an industrial park.
Mezzanine loans normally happen to be huge in amount ranging up to millions. It is to be kept in mind that the lenders of this particular kind of loan are usually highly specific for the kind of project that you may be launching. Therefore, you are going to have to do your homework and find a lender who is reliable and is willing to give you the funds that you need for a particular kind of project. This implies that a lender who is going to be suitable for a project of an office tower may not be the one that you’d want to deal with if the project that your company is launching entails development of a huge shopping center.
The above-mentioned information is probably more than sufficient to give you a little insight about the mezzanine loans. The above-mentioned information is certainly going to enable you to understand the very basics of such loans and determine whether or not it is going to be a suitable option for your company. Therefore, you can now make an informed decision about applying for a mezzanine loan while taking it for granted that you’re not destined to regret your decision.