Mezzanine capital refers to subordinated debt or preferred equity securities that often represent the most junior portion of a company's capital structure that is senior to the company's common equity. This form of financing is often used by private equity investors to reduce the amount of equity capital required to finance a leveraged buyout or major expansion. Mezzanine capital is often used by smaller companies that are unable to access the high yield market allows such companies to borrow additional capital beyond the levels that traditional lenders are willing to provide through bank loans.