Loan structure
Mezzanine loans, matched to your deal
A mezzanine loan fills the gap between what the senior lender will advance and what the sponsor wants to contribute as equity. It is secured by a pledge of the ownership interests in the borrower rather than by a mortgage on the property, sits behind the senior loan under an intercreditor agreement, and is priced for that position. Preferred equity is its close cousin, structured as an investment rather than a loan. Mezzanine lenders differ on leverage, on control rights and on which senior lenders they will sit behind, which is why one capital-stack file deserves several answers.
- 5,000+loan programs screened
- 5–8matches on a typical deal
- $0 upfrontto submit and compare offers
- 0.50–1.00%broker fee, paid only at closing
Who is a mezzanine loan actually for?
Sponsors whose senior loan does not reach the leverage the deal needs: a value-add or construction project where the senior lender stops short of the budget, an acquisition where the equity check would otherwise be too large, or a recapitalization that returns capital without refinancing the senior loan. If the senior lender will simply advance more, that is usually cheaper. Mezzanine is for the layer the senior lender will not take.
What do mezzanine lenders disagree about?
Position and control. Programs take different views on how far up the capital stack they will lend, what the intercreditor agreement with the senior lender must allow, whether they want cure rights and a purchase option on the senior loan, how much of the return should be current pay versus accrued, and whether preferred equity is a better fit than debt for a given senior lender. Some senior programs, agency and securitized executions among them, restrict or forbid mezzanine behind them, so the two layers have to be matched together.
What should be ready before a mezzanine file goes out?
The senior loan terms or term sheet and whether it permits subordinate financing, the full capital stack with the sponsor's equity shown, the business plan and its timeline, the ownership structure that would be pledged, and a clear exit for both layers. Files that arrive with the senior lender's position on subordinate debt already confirmed get taken seriously faster, because that is the first thing a mezzanine desk needs to know.
How does getting matched actually work?
You describe the deal once — about five minutes — and it is screened against 5,000+ loan programs. Most deals return 5–8 matches, and the median first offer arrives in under an hour. There is $0 upfront; the fee is 0.50–1.00%, paid only at closing.
YieldStack is a commercial mortgage brokerage, not a lender. The rate, the leverage and the credit decision belong to the lenders competing for your deal; our job is making sure the right ones see it at the same time, so the terms you compare are real competition rather than one desk’s appetite.
What do lenders actually look at?
Every program weighs these in its own way — which is the argument for several quoting at once.
- Whether the senior lender permits subordinate financing and on what intercreditor terms
- The total leverage across both layers against the business plan
- The sponsor's equity, and whether it is real cash or credited basis
- Current-pay capacity versus accrual during the plan
- The exit, and whether it repays both layers on the same timeline
Frequently Asked Questions
How is mezzanine different from a second mortgage?
A second mortgage is secured by the property. Mezzanine is secured by the ownership interests in the entity that owns the property, which is why it can exist behind senior loans that prohibit junior liens on the real estate.
What is preferred equity, and when is it used instead?
An investment in the ownership entity with a preferred return, rather than a loan. It is used where the senior lender will not allow mezzanine debt at all, and it is structured to behave similarly from the sponsor's side.
Does every senior lender allow mezzanine?
No. Some permit it under an intercreditor agreement, some restrict it to approved lenders, and some forbid it. The senior program's rule is the first thing to confirm.
Is mezzanine only for large deals?
It is more common on larger ones because the documentation is heavy, but smaller programs exist. Whether it is worth it depends on the gap it fills and the cost of filling it another way.
Can mezzanine be used on a construction project?
Yes, often to complete the capital stack behind a construction loan. The mezzanine lender will underwrite the same budget and schedule, and the intercreditor terms cover draw control.
What happens if the senior loan defaults?
The intercreditor agreement governs. Mezzanine lenders usually negotiate the right to cure the senior default or to buy the senior loan, which is why control rights matter as much as pricing.
Is YieldStack a lender?
No. YieldStack is a commercial mortgage brokerage, not a lender. Every term sheet comes from a lender in the network and is subject to that lender's underwriting.
Does it cost anything to see terms?
No. It costs $0 upfront to submit a deal and review offers; YieldStack's broker fee is 0.50–1.00% of the loan amount and is paid only at closing.
Is financing guaranteed?
No. Every credit decision is made by the lender; YieldStack arranges the introductions and negotiates on the borrower's side, and no loan, rate, or closing is guaranteed.
Next step
One deal.Several lenders.
YieldStack is a commercial mortgage brokerage, not a lender.