Convertible Debt

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Home Startup Terms Glossary Convertible Debt

What is Convertible Debt?

Convertible debts, also known as convertible loans, are short-term loans that an investor or investor group, such as an angel group, issues to startups. The balance’s principal and interest payments are converted into company ownership or equity upon maturity. Documents used when issuing convertible debts include convertible promissory notes .

Convertible Debt Examples

Examples of convertible debt benefits include:

  • Example 1. Fast access to cash
  • Example 2. Easy documentation
  • Example 3. Investor rewards
  • Example 4. Valuation delays
  • Example 5. No cash payments

Here’s an article about convertible debts.

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