Bullet maturity is a debt structure where the borrower repays all principal in a single payment at the end of the loan term.

How it works

Under a bullet loan, the company makes regular interest payments (and sometimes small fees) but does not pay down principal until maturity. At the final date — often 24 to 48 months in venture debt — the entire outstanding balance is due.

Lenders accept this structure because startups rarely generate steady free cash flow early on. They underwrite to an expected equity raise, acquisition, or refinance that clears the bullet. Some facilities include an amortization period after an initial interest-only stretch; others convert a portion to equity if milestones fail.

Compare to amortizing debt, where principal shrinks each month like a mortgage. Bullet structures lower near-term cash burden but create a concentrated repayment event.

Lenders price bullet structures against your expected equity timeline. If a Series C is supposed to repay the facility, slipping that round by two quarters can force an extension negotiation when your leverage is weakest — exactly when covenant pressure peaks.

Why it matters

• Founders: Calendar the maturity date alongside your fundraising plan. Missing it triggers default, higher rates, or forced equity conversion — often at bad timing.
• Investors: Bullet maturity aligns lender returns with an exit or up-round narrative. If the company stalls, lenders and equity holders negotiate extensions, waivers, or restructuring.

Common mistake

Focusing only on monthly interest affordability and ignoring the maturity cliff. Model the full bullet plus fees before you treat venture debt as cheap capital.

Related ideas

Venture debt, amortization, bridge loan, covenant, and cash flow.