Alabama Angel Fund Promissory Note Term Sheet

• Category: Small Business - Investment or Funding
• State: Multi-State
• Control #: US-ENTREP-004-2
• Format: Word; Rich Text

Description

"An angel investor or angel (also known as a business angel or informal investor) is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity. New start-up companies often turn to the private equity market for seed money because the formal equity market is reluctant to fund risky undertakings. In addition to their willingness to invest in a start-up, angel investors may bring other assets to the partnership. They are often a source of encouragement; they may be mentors in how best to guide a new business through the start-up phase and they are often willing to do this while staying out of the day-to-day management of the business.
Term sheet is a non-binding agreement setting forth the basic terms and conditions under which an investment will be made."

The Alabama Angel Fund Promissory Note Term Sheet is a crucial document that outlines the terms and conditions agreed upon between a borrower and an investor within the scope of a funding agreement. It serves as a binding agreement that specifies the terms under which the investor provides funds to the borrower, including repayment terms, interest rates, and other relevant provisions. This term sheet provides a framework for the promissory note, which is a legal instrument that establishes a borrower's commitment to repay the borrowed amount within a defined timeframe. In the context of Alabama Angel Fund, there may be several types of Promissory Note Term Sheets available. Some notable ones include: 1. Convertible Promissory Note Term Sheet: This type of term sheet outlines the terms of a promissory note that has the potential to convert into equity upon the occurrence of specific events, such as a future financing round or acquisition. 2. Secured Promissory Note Term Sheet: In this case, the promissory note is backed by collateral provided by the borrower. The term sheet specifies the assets or properties that act as security against the borrowed fund, providing protection for the investor in case of default. 3. Unsecured Promissory Note Term Sheet: This term sheet describes a promissory note without any specific collateral requirements. The borrower's creditworthiness and trustworthiness play a crucial role in determining the interest rate and repayment terms. 4. Amortizing Promissory Note Term Sheet: This type of term sheet governs a promissory note that requires periodic payments of both principal and interest over a defined period. It outlines the repayment schedule and the amount to be repaid at regular intervals. 5. Balloon Promissory Note Term Sheet: Here, the term sheet highlights a promissory note where a significant portion of the borrowed amount is repaid in a lump sum at the end of the loan term, while smaller periodic payments cover the remaining balance and interest. By utilizing the Alabama Angel Fund Promissory Note Term Sheet, both parties can ensure a clear understanding of the funding arrangement, protecting their interests and establishing a basis for a mutually beneficial relationship. It is crucial for borrowers and investors alike to carefully consider the various types of promissory note term sheets available and select the one that aligns with their specific requirements and risk appetite.