Understanding unitranche debt: definition and benefits

Unitranche debt is a type of financing that combines both [senior loans](/en/blog/definition-de-la-dette-senior-comprendre-les-avantages-et-les-risques) and [mezzanine loans](/en/blog/une-introduction-a-linvestissement-en-dette-mezzanine). Senior loans](/en/blog/definition-de-la-dette-senior-comprendre-les-avantages-et-les-risques) are loans that are repaid first, while [mezzanine loans](/en/blog/une-introduction-a-linvestissement-en-dette-mezzanine) offer less security and are repaid last. The term "unitranche" comes from the fact that the loan is considered a single category of debt capital, as opposed to separate loans.

The majority of unitranche loans are single-tranche loans, meaning that the loan is lent entirely from a single tranche of debt capital and has no sub-tranches.

Unitranche loans are known for their flexibility and competitive rates. They offer a generally lower interest rate than separate loans, and generally benefit from greater flexibility in terms of financial conditions.

Unitranche debt is ideal for higher-risk businesses, offering flexibility and additional financial security, as it is repaid first and last. Unitranche debt financing may be more expensive in the short term, but offers additional security and flexibility that make it worthwhile.