TERM NOTE

Where a business agrees to pay you a set amount of interest on your investment. Payments are fixed each month for a certain number of months.

EXAMPLE: YOU INVESTED $1,000 IN A TERM NOTE OFFERING ON NEXTSEED

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SECURITIES:
TERM NOTES
You own this

plant

PRINCIPAL:
$1,000
You invested this

Annualized interest rate: 18%
Interest payment on your investment

Maturity: 42 Months
Date of final payment

Security interest: Blanket lien on all assets of a business
A legal claim on the assets pledged by the business

Important
Securities are not guaranteed or insured and investors may lose some or all
of the principal invested if an issuer cannot make its payments

HOW PAYMENTS WORK

HOW ARE MY INTEREST PAYMENTS CALCULATED?

It works just like a mortgage or car payment! If the annualized interest rate is 18%, this means the monthly interest rate is 1.5%. (Monthly Interest = Annual interest of 18% divided by 12 months)

Month Monthly Interest x Principal Interest Payment
1 1.5% x $ 1,000 $ 15
2 1.5% x $ 982.74 $ 14.74
3 1.5% x $ 965.22 $ 14.48
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YOUR INTEREST PAYMENT IS CALCULATED BY MULTIPLYING THE
MONTHLY INTEREST RATE BY YOUR OUTSTANDING PRINCIPAL

WHY IS MY PRINCIPAL GOING DOWN EACH MONTH?

The business also pays you back part of your $1,000 principal each month.

Month Beginning Principal Balance Business Pays Down Principal Ending Principal Balance
1 $ 1,000 $ 17.26 $ 982.74
2 $ 982.74 $ 17.52 $ 965.22
1 $ 965.22 $ 17.79 $ 947.43
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YOUR PRINCIPAL GETS PAID DOWN EACH MONTH – JUST LIKE A MORTGAGE OR CAR PAYMENT!

SO WHAT DO MY MONTHLY PAYMENTS LOOK LIKE?

Your total monthly payment is made up of interest that you earned and the part of your principal that gets paid down every month.

Month Interest Payment Principal Payment Your Total Monthly Payment*
1 $ 15 $ 17.26 $ 32.26
2 $ 14.74 $ 17.52 $ 32.26
3 $ 14.48 $ 17.79 $ 32.27

*NextSeed charges a 1% administrative fee for each payment a business makes to you.

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YOUR MONTHLY PAYMENT IS PARTIALLY MADE UP OF AN INTEREST PAYMENT AND A PRINCIPAL PAYMENT

WHEN DO PAYMENTS END?

Payments end when the business pays you back your outstanding principal balance, or when the maturity date is up, whichever is earlier.

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Term note payments are mapped out so the business agrees to make the same payment every month until the maturity date.

In this example, the business would make payments of $32.26 every month for 42 months. If the business does not make a payment of $32.26, it would be in default.

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If a business chooses to make a prepayment, the prepayment gets applied to your principal, but the monthly payments stay the same.

This means the business will potentially finish making payments early, prior to the maturity date.

There are currently no opportunities to exit or resell NextSeed investments.
After an offering has closed, your investment is committed to the business.

Disclaimer: This example is for illustrative purposes only and does not reflect an actual deal or performance.
The terms of each deal differ. The total payments above do not take into account NextSeed fees of 1% on
each payment made to investors. Payments are not guaranteed or insured and investors may lose some or all
of the principal invested if the business cannot make its payments.