convertible loan

Definition

A loan with a warrant attached that gives the debt holder the option to exchange all or a portion of the loan principal for an equity position in the company at a predetermined rate of conversion within a specified period of time. Convertible loans are offered by companies seeking more favorable lending terms in which lenders may give up interest earning opportunities for a potential stake in company.

Use convertible loan in a sentence

You may want to try and get a convertible loan that will allow you greater flexibility while you have it,.

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It was a convertible loan and that meant that there was a warrant attached to it and I wondered what exactly that meant.

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Interest under a convertible loan will usually be payable periodically, but it is possible to agree, for example, that interest be rolled-up and paid when the loan itself is converted or redeemed. Interest may also be capitalised if the CLNs are converted.

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