Bullet repayment
What is a bullet repayment on a business loan?
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BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED
// THE SHORT ANSWER
A bullet loan repays its whole principal in one amount at maturity, with only interest paid along the way. It keeps the exposure at its peak for the life of the loan and makes the final payment a refinancing in all but name, which is why commercial lenders keep it for borrowers with strong access to other lenders or a clear source for the lump sum. A weak read of a borrower changes the structure first, and an amortising facility in place of a bullet is one of the first things a desk asks for.
BASIS Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.
// WHAT IT IS NOT
A bullet is not a balloon: a balloon leaves a large final payment after some principal has been repaid along the way; a bullet repays none until the end.
// WORKED IN
// NEXT TO IT
- Working capital facility
- Multi-currency facility
- Clean-down
- Self-liquidating
- Balloon payment
- Amortisation
- Hardcore (overdraft)
- Term-out
- Club facility
- Unsecured lending
- Cash sweep
- Finance lease
- Drawdown
- Interest-only period
- Tenor
- Utilisation
- Seasonal facility
- Syndicated loan
- Maturity extension (amend and extend)
- Mezzanine finance
- Refinancing risk
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