Subordinated Debt
Debt that ranks behind other, senior debt in priority of repayment, meaning it's paid only after senior obligations are satisfied in a default or liquidation.
Because subordinated debt carries more risk for the lender, being repaid later in the priority order, it typically comes with a higher interest rate than senior debt to compensate for that added risk.
Mezzanine financing is a common example of subordinated debt, used by businesses that have already maxed out senior debt capacity but need additional capital without giving up as much equity as a straight investment would require.
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