3 - What is structure finance?

When a company needs money to develop a project, it can use structured finance. This customized loan is broken down into levels of guarantee so that lenders in the upper level of the structure earn low interest rates and lenders at the bottom of the structure earn higher interest rates. The lower lenders are in the structure, the less guarantee they have of getting their money back in case of bankruptcy.

[Man 1] Go, go, go, go, go! Urgh! 
[Man 2] You’re going to tell me how it works?
[Man 1] How what works? The game of rugby? 
[Man 2] No. Structured finance! 
[Man 1] Structured finance is when a company needs money to expand its business or develop a project. It's on a case-by-case basis.
[Man 2] OK, so the client sets it up?
[Man 1] Well, that depends. We customize a loan to our client’s needs using structured finance. It's not a standard loan you get to, say, buy a car. 
[Man 2] No risk there! I don't have one.
[Man 1] Companies' needs are far more complex. We need to take into account all the particularities of our client’s project. We then structure the loan into levels of guarantees. The lenders in the upper levels of the structure earn low interest rates. If the borrower goes bankrupt, they have more chance of getting their money back. But the lenders at the bottom of the structure who earn higher interest rates would be less likely to get their money back in case of bankruptcy. So that's why we use the word “structured”. We slice the loan just like a pizza. 
[Man 2] Who are your clients? 
[Man 1] Big companies with big projects!
[Man 2] But I thought that companies finance themselves through IPOs.
[Man 1] Do you know what an IPO is? 
[Man 2] Sure, I do! It's when a company goes public. 
[Man 1] Okay, let's put it this way. If you want to buy a car, you have two solutions: you could buy it with a friend and split the cost 50-50, but then the car belongs to both of you, or you can lend money from the bank or a friend. The car belongs to you alone, and you have to pay it off every month.
[Man 2] Oh, look! Oh man, it looks like… Yes! That's it! That's it!
[Man 1] A try! Yay!