{"id":4467,"date":"2021-08-25T09:04:20","date_gmt":"2021-08-25T08:04:20","guid":{"rendered":"https:\/\/octagoncapital.co.uk\/?p=4467"},"modified":"2023-07-05T14:08:22","modified_gmt":"2023-07-05T13:08:22","slug":"how-is-a-bridging-loan-different-to-mezzanine-finance","status":"publish","type":"post","link":"https:\/\/octagoncapital.co.uk\/guides\/how-is-a-bridging-loan-different-to-mezzanine-finance\/","title":{"rendered":"How Is a Bridging Loan Different to Mezzanine Finance?"},"content":{"rendered":"
Mezzanine finance requires borrowers to give up equity in their development project or business, whereas bridging finance is secured against property, and is used on a much shorter term. Both types of finance must also pay interest.<\/p>\n
Both mezzanine and bridging loans can be a great to help borrowers in certain situations, carrying different levels of risk, eligibility criteria, repayment plans and more. But how precisely do they differ? And which one is best suited to certain situations and circumstances?<\/p>\n
Here, Octagon Capital explores the differences between mezzanine finance and bridging loans, and which one works best in different situations and circumstances.<\/p>\n
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Mezzanine finance is used more long-term than a bridging loan, requiring the borrower to give up equity either in their development project or business, while a bridging loan is used on a much shorter-term basis, securing a property against the loan while repaying after a few months (the maximum length of time you can take out a bridging loan with Octagon Capital being 24 months).<\/p>\n
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Mezzanine finance can appeal to lenders as they not only get paid interest back by the borrower, but also get shares, which could potentially be more valuable than a standard repayment by the borrower. Mezzanine finance lenders<\/a> has been designed to accommodate for ventures that are potentially riskier, with funding available for a range of borrowing periods \u2013 from a few months to 10 years.<\/p>\n <\/p>\nMezzanine vs Bridging Loan: Uses<\/strong><\/h3>\n