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Types of debts and something about mezzanine debt

Did you ever want to start your own business like owning a coffee bar, hotel or a restaurant? To be the only owner of the city swimming pool, leader in the frozen food business or something similar – but did not have the money to start with? No wealthy relatives around you and on top of that you did not even come from a rich family. The desire grows in you and the ideas are flying right into your mind and you do not want all that to go to waste. At this point, you think you do not have a solution, but you actually do! One of the ways witch people usually take on their road to success is the one going to the bank, where you can ask the bank for a loan. At that point, you are entering a debt. What does debt mean? Well, a debt is an obligation between two legal entities, and it is created in the moment when two entities agree to make it happen. From a finance view, debt means that the bank is loaning you money so that it can earn from you later on in the future, once you have to pay out the interest to them. There are different types of debts, every one of them has its own financial and legal obligations and rules. For example: secured debt, unsecured debt becoming secured debt, lender selling the collateral, right of set-off, unsecured debt, debt after a divorce, contingent liabilities, business debt, proprietorship or partnership debt and mezzanine debt, which is also known as a mezzanine loan. Mezzanine debt is the one that includes warrants (capital-based options) and it is often used for finance undertaking and buyouts.


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