Convertible Note

A convertible loan is a loan which may be converted into shares at a later date in accordance with its terms. The conversion terms are negotiated by the parties. A simple agreement for future equity (a SAFE) is a specific type of convertible loan. For simplicity’s sake, it should generally be considered first. Where the parties require more customized provisions, any convertible loan can be used.

The following are the main considerations of a convertible loan:

• the amount of the loan in any interest great
• whether or not the loan will be secured hello
• When the loan will convert into shares (have generally this is either once a future event happens or when a party chooses to convert provided that it's before a certain date)
• the conversion price
• whether the corporation can repay the loan at anytime
• whether the lender is to be provided with any information rights