Convertible Notes, also called “bridge loans,” are loans provided to the Company that will be converted to Company capital stock at some specified future event. The Convertible Notes bear interest — typically 5-10% — and will generally be converted on the same terms as the principal. Convertible Notes will have some repayment date, ranging from as short as a few months to three or more years. Most often they fall in the 12-18 month range. Beyond that, the Investors can demand repayment of interest and principal.
Glossary