Debt Investments: Overview

What is a debt investment?

Businesses can offer debt investments to investors as part of their capital structure. Debt investments are often used in conjunction with equity investments, bank loans, and other types of financing.  

With debt investments on NextSeed, businesses offer investors a return on their principal by making monthly payments. Typically, businesses are required to pay investors in full (principal + return) by a certain maturity date. Usually, these are short/middle-term investments of up to 8 years. Investors have no ownership in the business and the investment ends when payments end. If a business liquidates its assets, debt holders have a priority claim to those assets before equity stakeholders.

Who can make a debt investment?

Anyone can invest in a debt investment in a Regulation Crowdfunding offering. Anyone can invest at least $2,200 every 12 months in Regulation Crowdfunding offerings, and investments limits apply to those making larger investments. 

Only accredited investors can make an investment in a Regulation D offering on NextSeed. Accredited investors in Regulation D offerings are not limited in the amount they can invest.

How do I make a debt investment?

Sign up and create an investment account on NextSeed. This investment account is held at our partner bank, GoldStar Trust. You will need to link your bank account to your NextSeed account so you can easily transfer funds in and out. All investments are made from your NextSeed account, and any payments made by businesses will be deposited into your NextSeed account. 

You can invest in a business on its offering page by clicking the “Invest Now” button for that campaign.

What is a note purchase agreement?

A note purchase agreement is a legal agreement between the investors and a business offering a debt investment on NextSeed. The note purchase agreement governs the notes purchased by the investors from the business.