Which loan is secured by collateral in the stock of the development company?

A mezzanine loan is a type of financing that is typically used to fill the gap between senior debt and equity in a project’s capital stack. It is one of the several secured loans that can be backed by specific collateral, which in this case, is the stock of the development company. Mezzanine financing often takes the form of subordinated debt or equity that is convertible into ownership shares, giving lenders some degree of control over the project. This financing option allows a development company to secure funds without having to relinquish equity or control at the outset, making it particularly attractive for developers looking to expand their project without significant upfront equity investment.

In this context, the other loan types do not align with being specifically secured by stock in a development company. Construction loans focus on funding the building process directly and are usually secured by the property being developed. Bridge loans are short-term loans that provide immediate cash flow between transactions, often secured by the property being acquired or developed, but not specifically tied to equity instruments. Hard money loans are short-term loans secured by real estate, but they are typically based on property value rather than equity or stocks related to a company. Thus, the unique characteristic of mezzanine loans making them secured by collateral in the form of stock