What is meant by "Bullet Maturity" in a loan context?

Bullet maturity refers to a loan structure where the entire principal amount is due at a specific date in the future, rather than being repaid in installments over the life of the loan. This means that borrowers do not make any principal payments until the maturity date, at which point the full outstanding balance must be repaid.

This structure is often used in various forms of financing, including certain types of bonds and loans, and is appealing for borrowers who prefer to conserve cash flow during the loan term, allowing them to use their funds for operational needs or investments. Since the principal repayment is concentrated at the end of the term, it can also lead to significant cash outflows at maturity, which requires careful financial planning on the borrower's part.

In contrast, loans that involve principal repayment in equal installments would not qualify as bullet maturity. Similarly, a scenario where less than the entire principal is repaid or where investors can call the loan early does not align with the definition of bullet maturity, as these would imply different repayment structures and borrower obligations.