Last in the debt portion of the capital stack is the mezzanine debt. The name comes from the middle floor in a building, one that sits between two others, but not necessarily needed on its own. Mezzanine was originally called stretch financing, helping smaller companies patch their funding with a level that bridges the debt and the equity. Historically, this has been growth capital, but it can actually be bridge financing to be taken out with more permanent financing later on and hopefully at a cheaper rate. This debt is expensive as it is junior and unsecured. There are few protections for the lender. It is called first loss lending as default, stress or bankruptcy will often result in this unprotected lender class losing capital first. Mezzanine is fixed coupon and private in nature as previously discussed. The PIK or pay in kind feature is something that can be added to reserve cash. The loan will accrue value instead of paying interest. To further mitigate risk, mezzanine lenders will often seek an equity warrant that allows them to participate in the upside of the deal by claiming an ownership stake.