Legal & Compliance
Bullet Repayment
A loan structure where the entire principal is repaid in a single lump sum at maturity rather than through periodic payments.
A bullet repayment (or balloon payment) structure requires the borrower to repay the entire principal amount at the end of the loan term in one payment, rather than amortizing it over time. In venture debt, bullet structures allow startups to preserve cash during the loan term, paying only interest, with the principal due at maturity — by which time the company expects to have raised additional equity or generated sufficient revenue.
In Practice
The startup's $10M venture debt facility had a 3-year term with interest-only payments and a bullet repayment at maturity, giving them time to grow into the debt before the principal came due.
Why It Matters
Bullet repayment structures match the cash flow reality of high-growth startups — they can afford interest payments but not principal amortization during growth phases. However, the maturity wall creates refinancing risk.
VC Beast Take
The risk with bullet structures is the cliff: if the company hasn't raised more capital or achieved profitability by maturity, the bullet repayment can force a fire sale or distressed financing. Smart companies start refinancing conversations 6-12 months before maturity.
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