A convertible promissory note is one that can be converted into equity once the future specified date reaches or when a specified anticipated event happens. These types of loan promissory notes are usually used by startups when raising capital. The conversion into equity is automatic since it neither requires the vote of the investor nor that of the startup.
The conversion of debt into equity is normally determined by the terms agreed upon by the issuer and the lender. The note benefits both the investor and the startup since the investor is looking for investment opportunities while the startup is concerned with his or her business capital demands. Use example sample promissory note templates by downloading online in word format.
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