Mezzanine finance sits between senior debt and the developer's own equity. It is the layer of funding that allows developers to take on larger projects than their cash reserves would otherwise permit. Understanding how it works — and when the cost is justified — is essential for scaling a development business.\n\nHow It Works — Senior development finance typically covers 55% to 70% of total project costs or 60% to 65% of Gross Development Value (GDV). The developer must fund the remainder. On a project with 1 million total costs, senior debt might cover 650,000. If the developer only has 150,000 in cash, there is a 200,000 gap. Mezzanine finance fills this gap.\n\nThe Cost — Mezzanine is more expensive than senior debt because the mezzanine lender takes a subordinate position — if things go wrong, the senior lender is repaid first. Typical mezzanine rates are 12% to 20% per annum (1% to 1.7% per month). Arrangement fees of 1.5% to 3% are standard. Some mezzanine providers also take a profit share of 10% to 25% of the development profit, which can significantly increase the effective cost.\n\nWhen It Makes Sense — When the profit margin is large enough to absorb the cost and still deliver acceptable returns. A project with a 25% margin on GDV can typically support mezzanine. A project at 15% margin cannot. When you have deal flow but limited cash — mezzanine lets you run multiple projects simultaneously rather than waiting to complete one before starting the next. When market timing matters — if you have found a site at a good price and waiting to accumulate more cash means losing the opportunity.\n\nWhen It Does Not — When margins are thin. When the development timeline is uncertain (rolling interest compounds rapidly). When you have not yet established a track record — first-time developers rarely qualify for mezzanine, and the cost erodes already-uncertain margins.\n\nKey Providers — Blend Network (peer-to-peer platform offering mezzanine from 12% per annum). CapitalRise (high-net-worth funded, typically for London and prime regional). Atelier Capital (developer-focused). LendInvest (senior and stretched senior, approaching mezzanine territory). Private family offices and high-net-worth individuals also provide mezzanine, often sourced through specialist brokers.\n\nStretched Senior — An alternative to mezzanine. Some senior lenders offer stretched senior debt covering up to 80% to 90% of costs at rates between senior and mezzanine levels (7% to 12%). This single facility replaces the need for separate senior and mezzanine tranches, simplifying the structure and often reducing total cost. Together Money, Shawbrook, and some specialist funds offer stretched senior products.\n\nStructuring — Mezzanine is secured behind the senior lender via a second charge or through an intercreditor agreement. The senior lender must consent to the mezzanine facility. Some senior lenders prohibit mezzanine entirely, while others have approved mezzanine partners. Always confirm compatibility before arranging either facility independently.