Mezzanine debt is one such popular instrument that sits on the balance sheet at the “mezzanine” level, above shareholder equity but subordinated to all senior bank debt. Thus, if a company fails, mezzanine investors will be repaid from the proceeds of the liquidation only after the senior lenders have been made whole. Mezzanine loans are therefore considered to be higher risk loans, especially since most are unsecured by asset collateral, but investors are compensated for these risks through higher interest rates and transaction fees. While primarily a debt instrument (i.e., a loan), mezzanine financing may also include equity-like features, including options and warrants, which typically make up 15-25% of the total return.