• Index
  • About Yokum
  • Disclaimer
    • Privacy Policy
  • Contact Yokum
  • FAQs

Startup Company Lawyer

  • Incorporation
  • Founders
  • Stock options
  • General
  • Convertible note
  • Series A
  • Down Rounds
  • M&A
You are here: Home / Convertible note / What should the maturity date of the convertible note be?

What should the maturity date of the convertible note be?

May 2, 2007 By Yokum 6 Comments

The maturity date probably should be related to the amount of time that the money will last or the anticipated date of the event to which the funds were meant to “bridge.”  The term “bridge” indicates that the loan is supposed to last until a specific event, like an equity financing or liquidity event.  VCs seem to cringe at bridge loans that are a “bridge to nowhere.”  As a practical matter, most companies will not have the funds to repay the loan at maturity, so the investors will generally continue to extend the maturity date instead of plunging the company into bankruptcy or taking other drastic actions.

Most bridge loans have maturity dates of less than one year.  Many early stage seed bridge loans seem to have relatively long maturity dates, such as six months to a year.  To satisfy the requirements of obtaining an exemption from the licensing requirements of the California Finance Lenders law, the maturity date of the bridge loan may be no longer than one year.  A longer bridge loan makes the exemption unavailable, but does not necessarily subject the lender to the licensing requirements.

Filed Under: Convertible note

Recent Posts

  • What is convertible equity (or a convertible security)?
  • Is crowdfunding legal?
  • What are the terms of Yuri Milner/SV Angel’s Start Fund $150K investment into Y Combinator companies?
  • Is convertible debt with a price cap really the best financing structure?
  • Can a California company have unpaid interns?

Recent Comments

Announcements

Subscribe to my RSS feed if you want to receive updated content. If you don't know what RSS is, read this article on "What is RSS?". Or you can subscribe via email.

Tom Taulli of Business Week says that in Hiring the Right Lawyer When Raising Capital "[S]ome startup attorneys have incredibly valuable blogs, such as Yokum Taku's Startup Company Lawyer ..."

Freelance Folder says that Startup Company Lawyer is one of the "20 Must-Read Blogs for Online Entrepreneurs."

Furqan Nazeeri says that "If Linus Torvalds Were a Lawyer ... he'd be Yokum Taku."

Jay Jamison asks "Yokum Taku - the Valley's Best Start-up Lawyer?"

Sachin Agarwal says that Startup Company Lawyer is "indispensible for budding and active entrepreneurs."

Venture Hacks includes Startup Company Lawyer as part of the "Startup MBA" blog list.

Recent Posts

  • What is convertible equity (or a convertible security)?
  • Is crowdfunding legal?
  • What are the terms of Yuri Milner/SV Angel’s Start Fund $150K investment into Y Combinator companies?
  • Is convertible debt with a price cap really the best financing structure?
  • Can a California company have unpaid interns?

Copyright 2007 to 2016 Yoichiro Taku