Bullet repayment

Bullet repayment is the repayment method in which the company repays all of the principal borrowed in one go, at the maturity of the loan, and pays only interest during the life of the financing. The France Invest and Deloitte study of March 2026 describes unitranche debt as repayable as a bullet. Unitranche accounted for 56% of the corporate debt amounts invested by private debt funds in France in 2025. An amortising loan works differently: the company repays the principal in successive instalments and its debt falls each year. Bullet repayment frees up operating cash flow during the life of the loan to finance growth, capital expenditure or acquisitions. In return, interest remains calculated on the full principal until maturity, and the company’s leverage falls only if its EBITDA grows. The risk is concentrated at maturity: the company repays through a refinancing, a disposal or accumulated cash, and prepares that refinancing before the final year of the loan. The agreement provides where relevant for a mandatory repayment of part of the excess cash flow (cash sweep) and for prepayments on asset disposals.

A company borrows €100m over six years at 7%. With a bullet repayment, it pays €7m of interest a year, or €42m over the term, then repays €100m at maturity. With straight line amortisation of €16.7m a year, cumulative interest falls to €24.5m and the company devotes €16.7m of cash each year to repaying the principal.

• The refinancing plan at maturity, on which repayment of the principal depends
• The cash sweep clauses that require partial repayments out of excess cash flow
• The terms and cost of a voluntary prepayment
• The change in leverage without amortisation, which depends on EBITDA growth