Our financing solutions
Convertible loan or “convertible note”
Preparing a fundraising round with a loan potentially convertible into shares
The convertible loan, often called a “convertible note”, is a loan with the specific feature of being convertible into shares during a defined period and subject to compliance with a set of conditions.
What is a convertible loan?
A convertible loan is a financial instrument mainly intended for start-ups and scale-ups that do not yet have short-term repayment capacity and whose business plan foresees a future fundraising round, generally within 12 to 24 months.
It thus allows the company to finance itself while postponing the discussion on the valuation of its shares. For the investor, it is, in a way, an initial “try-out” investment.
The implementation of a convertible loan is generally faster than a fundraising round where all investors around the table must agree on the terms of the shareholders’ agreement.
Characteristics of the convertible loan
Which companies is the convertible loan intended for?
The convertible loan is intended for young innovative companies with limited repayment capacity.
What amount can be invested by finance&invest.brussels?
finance&invest can invest an amount ranging from 100,000€ to 1,500,000€.
What are the advantages of a convertible loan compared to a bank loan?
The main advantage lies in the possibility given to the investor not to require repayment of its debt, thanks to the conversion mechanism, which allows it to be repaid in shares of the company.
In which cases does finance&invest.brussels convert the remaining balance of its loan into shares?
The conversion of the remaining balance is never automatic; it is a decision that remains in the hands of the investor. It generally occurs when the company carries out a fundraising round within 24 months following the implementation of the loan and if and only if finance&invest.brussels considers that the project shows positive growth indicators.
Cost of the convertible loan
What is the interest rate of a convertible loan?
We offer fixed interest rates ranging from 6% to 8%, the level of which reflects our assessment of the risk exposure of each project.
What is the discount rate?
Between 15% and 30% depending on the maturity and risk of the project.
What are the repayment terms of a convertible loan?
A convertible loan initially takes the form of an unsecured loan with a relatively long principal grace period (between 12 and 24 months). During the principal grace period, the company only repays interest on a monthly basis.
At the end of this period, also referred to as the conversion period, if finance&invest.brussels has not had the opportunity to convert its loan or has not wished to convert it, then the loan continues until maturity, with both interest and principal repayment.
Funding procedure
The decision-making process for a convertible loan generally takes 3 to 6 months.
Funding steps
Initial contact with a finance&invest.brussels analyst to verify project eligibility.
Analysis of your application based on: added value for Brussels, sustainability, team, market, product, technology, financials (historical & business plan).
Presentation of the file to the investment committee. If the project receives a positive opinion, the investment committee then prepares an investment proposal to be submitted to the Board of Directors.
Presentation of the investment proposal to the Board of Directors.
If approved, our teams begin the final phase, namely negotiations and drafting of agreements.
Documents to provide
A business plan for the project
A 3-year financial plan in Excel
Company financial statements (2 to 3 years)
Le CV des entrepreneurs
Latest updated articles of association
Shareholding structure
Request funding
Do you need financial support to launch or grow your business?
We offer a range of tailor-made financing solutions. Request funding by completing this form. We will assess your request and get back to you with a first answer within 3 weeks.
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