Franklin Ohio Angel Fund Promissory Note Term Sheet

• Category: Small Business - Investment or Funding
• State: Multi-State
• County: Franklin
• 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."

Franklin Ohio Angel Fund Promissory Note Term Sheet is a legal document outlining the terms and conditions of a loan agreement between the Franklin Ohio Angel Fund (FOAF) and a borrower. This term sheet plays a crucial role in facilitating the loan process and serves as a basis for further negotiations. Key Features of the Franklin Ohio Angel Fund Promissory Note Term Sheet: 1. Loan Amount and Purpose: This section defines the principal amount being loaned by FOAF to the borrower. It also specifies the purpose for which the loan proceeds will be utilized. 2. Interest Rate: The term sheet includes details about the interest rate that will be charged on the loan. This rate can be fixed or variable, and it determines the cost of borrowing for the borrower. 3. Maturity Date: The document specifies the date by which the borrower is required to repay the total loan amount, including any accrued interest, to FOAF. It is essential to understand the repayment timeline to plan accordingly. 4. Repayment Terms: This section outlines the repayment terms, including the frequency of payments (monthly, quarterly, etc.) and the mode of repayment (check, electronic transfer, etc.). It may also mention any grace period or prepayment penalties. 5. Collateral and Security: If applicable, the term sheet may mention the collateral or security required by FOAF to secure the loan. This can be in the form of assets, personal guarantees, or other forms of security. 6. Events of Default: The term sheet outlines the circumstances that can trigger an event of default, such as missed payments, breach of loan covenants, or financial instability. Consequences of default, such as accelerating the loan or imposing penalties, are also mentioned. Types of Franklin Ohio Angel Fund Promissory Note Term Sheets: 1. Short-Term Loan Term Sheet: This type of term sheet covers loans with a relatively shorter repayment period, typically ranging from a few months to a few years. 2. Long-Term Loan Term Sheet: This term sheet caters to loans with an extended repayment period, spanning several years. Such loans are usually associated with larger loan amounts and may require more substantial collateral. 3. Convertible Note Term Sheet: In cases where the loan can be converted into equity or shares of the borrower's company, a convertible note term sheet is utilized. This enables FOAF to become a shareholder in the borrower's venture under specific circumstances. 4. Collateralized Term Sheet: For loans where assets are used as collateral, a collateralized term sheet is created. This document outlines the collateral requirements, appraisal process, and steps to be taken in case of default. In conclusion, the Franklin Ohio Angel Fund Promissory Note Term Sheet is a comprehensive legal agreement that establishes the terms and conditions of a loan between FOAF and a borrower, ensuring clarity and mutual understanding between the parties involved.