# Subordinated loan

- Canonical URL: https://www.gerhardmerk.de/subordinated-loan
- Post ID: 588904
- Modified: 2023-07-25T21:14:12+00:00
- Language: en

## Definition

Generally, a loan in which the creditor ranks behind the claims of other lenders from the outset in the event of the debtor's insolvency (debt which ranks after other debts should a company fall into insolvency or be closed). In detail, a variety of contractual conditions are possible and also common. Due to the subordination, the loan is subject to a high risk of default, which must be compensated for by a significantly higher interest rate. - The main advantage of a subordinated loan on the part of the debtor is that the contractual term is generally longer than for a normal bank loan. In addition, with bullet repayment combined with bullet interest, the financing costs can be postponed in their entirety to a later date. For start-ups in particular, this provides a time buffer that is often crucial to success. - Subordinated loans are generally classified as mezzanine capital. Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

## Machine-readable

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