How Long Does It Take to Get a Mezzanine Loan?

Quick Answer

Getting a mezzanine loan takes 30–90 days from initial application to funding. The timeline is driven primarily by the complexity of the deal, the intercreditor agreement negotiation with the senior lender, and the borrower's readiness with financial documentation.

Timeline by Deal Type

Deal Type	Typical Timeline	Key Driver
Stabilized property, existing relationship	30–45 days	Fast underwriting, simple intercreditor
Value-add acquisition	45–60 days	More diligence on business plan
Ground-up construction	60–90 days	Complex structure, draw schedules
Preferred equity (mezzanine alternative)	45–75 days	Operating agreement negotiation
Large portfolio or multi-property	60–90+ days	Multiple appraisals, entity review

What Is a Mezzanine Loan?

A mezzanine loan is a subordinate financing layer that sits between the senior mortgage and the borrower's equity in a commercial real estate capital stack. It is secured by a pledge of the borrower's ownership interest in the property-owning entity rather than by a lien on the real estate itself.

Mezzanine debt is commonly used to:

• Bridge the gap between what a senior lender will provide (typically 60–75% LTV) and the total capital needed
• Reduce the borrower's required equity contribution
• Finance value-add renovations or repositioning strategies
• Provide acquisition capital on a faster timeline than raising equity

Step-by-Step Process

Phase 1: Application and Term Sheet (1–2 weeks)

• Initial inquiry (1–3 days): Submit a loan request package including property details, financial statements, rent roll, operating history, and your business plan.
• Preliminary underwriting (3–7 days): The mezzanine lender evaluates the deal's risk profile, the senior lender's terms, and your track record.
• Term sheet issuance (2–5 days): If interested, the lender issues a non-binding term sheet outlining loan amount, interest rate (typically 10–18%), term, fees, and key covenants.
• Term sheet negotiation and execution (2–5 days): Negotiate terms and sign the term sheet, which usually requires a good-faith deposit of $10,000–$50,000.

Phase 2: Due Diligence (2–4 weeks)

Once the term sheet is signed, formal due diligence begins:

• Third-party reports (2–3 weeks): Appraisal, environmental Phase I, property condition assessment, and possibly a seismic report. Many of these may already exist from the senior loan process.
• Financial underwriting (1–2 weeks concurrent): Detailed review of historical financials, rent rolls, lease abstracts, tax returns, and borrower net worth/liquidity verification.
• Legal entity review (1–2 weeks concurrent): Examination of the ownership structure, operating agreements, and organizational documents.
• Background and credit checks (3–5 days): Standard for all principals and guarantors.

Phase 3: Intercreditor Agreement (2–4 weeks)

This is often the most time-consuming and unpredictable step. The intercreditor agreement (ICA) governs the relationship between the senior lender and the mezzanine lender. Key negotiation points include:

• Cure rights — The mezzanine lender's right to cure defaults on the senior loan.
• Standstill provisions — Restrictions on the mezzanine lender's ability to foreclose during senior loan workouts.
• Buy-out rights — The mezzanine lender's option to purchase the senior loan at par.
• Notification requirements — When and how each lender must notify the other of defaults.

Some senior lenders have pre-approved mezzanine lenders and standard ICA forms, which can shorten this phase to 1–2 weeks. Others require extensive custom negotiation.

Phase 4: Loan Documentation and Closing (1–2 weeks)

• Document drafting (5–10 days): The mezzanine lender's counsel drafts the loan agreement, pledge agreement, and related documents.
• Document review and negotiation (3–7 days): Borrower's counsel reviews, negotiates, and finalizes.
• Closing and funding (1–3 days): Sign documents, fund escrow, and disburse proceeds.

Typical Mezzanine Loan Terms

Term	Typical Range
Loan amount	$1M–$50M+
Interest rate	10–18%
Combined LTV (with senior)	75–90%
Term	2–5 years
Origination fee	1–2%
Prepayment penalty	Yield maintenance or lockout
Security	Pledge of ownership interest

How to Speed Up the Process

• Have documentation ready. Prepare a complete loan package before approaching lenders. Missing documents are the most common cause of delays.
• Use a lender with an existing ICA relationship. Ask your senior lender which mezzanine lenders they have worked with before and whether they have a standard intercreditor form.
• Engage counsel early. Have your attorney review the term sheet before signing and begin document review immediately upon commitment.
• Order third-party reports concurrently. If reports from the senior loan closing are recent (within 6–12 months), they may be assignable to the mezzanine lender, saving 2–3 weeks.

Mezzanine Debt vs. Preferred Equity

Preferred equity serves a similar function in the capital stack but is structured as an equity investment rather than debt. It avoids the need for an intercreditor agreement (since there is no lien or pledge to coordinate), but requires negotiation of the operating agreement and typically takes a similar 45–75 days to close.

Bottom Line

A mezzanine loan takes 30–90 days to close. The intercreditor agreement negotiation with the senior lender is typically the longest and least predictable phase. Having complete documentation and working with a mezzanine lender already approved by your senior lender can compress the timeline to 30–45 days.