District of Columbia 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 District of Columbia Angel Fund Promissory Note Term Sheet serves as a crucial document outlining the terms and conditions of a financial agreement between a borrower and an angel investor. This legal instrument is designed to protect the interests of both parties while providing a framework for the loan agreement. It is important to note that there may be different types of District of Columbia Angel Fund Promissory Note Term Sheets, each catering to specific requirements and circumstances. Here are some relevant details to consider when exploring this topic: 1. Purpose: The primary purpose of the District of Columbia Angel Fund Promissory Note Term Sheet is to establish a clear understanding between the borrower and the angel investor regarding the loan's key aspects. 2. Loan Amount: This term sheet outlines the specific amount of funds to be provided by the angel investor to the borrower. It is important to consider whether this amount is fixed or subject to negotiation. 3. Interest Rate: The interest rate is a critical factor in any loan agreement. The term sheet will clearly define the interest rate applied to the loan, which could be fixed or variable, depending on the terms agreed upon. 4. Repayment Terms: This section delves into the repayment framework, including the timeline and schedule for repaying the loan. It may also cover any installment plans or bullet repayment arrangements. 5. Collateral and Guarantees: In some cases, the borrower may need to provide collateral or guarantees to secure the loan. The term sheet may specify the type and value of collateral required, ensuring that the lender's investment is protected. 6. Conversion Rights: If the loan has the potential to be converted into equity or equity-like instruments, the term sheet should outline the conversion ratio, conditions, and any associated rights. 7. Event of Default: This critical section defines what circumstances would constitute a default and the corresponding consequences. It may include penalties, acceleration clauses, or other actions that the lender can take if the borrower fails to fulfill their obligations. Overall, the District of Columbia Angel Fund Promissory Note Term Sheet is a comprehensive yet concise document that ensures transparency and sets clear expectations for both the lender and borrower. Different types of term sheets may exist depending on specific requirements, such as convertible loan term sheets, secured loan term sheets, or bridge loan term sheets. It is essential for all parties involved to carefully review and understand the terms outlined in the term sheet before moving forward with the loan agreement.