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About Convertible Loans

"Convertible loans" also know as "convertible loan notes" or "convertible debt" refer to any type of investment made initially by loan that can, or must convert, in whole or in part into shares. This is a financing structure used by many companies.

An investment through a convertible note has a number of advantages when compared to an equity investment. The major advantages are summarised below in the downloadable convertible loan guide.

To read our full guide on convertible loans please find the link to the download at the bottom of the page.

Convertible Loan Video

Example: Harry invests £1,000 in a convertible loan, at an interest rate of 9%, for a term of 360 days. At the end of the term the note is convertible into shares in the issuing company at a 10% discount to the market price.

Harry can treat the loan as a straight loan and receive £1,090 in cash at the end of 360 days (loan interest of £90 and the £1,000 principal amount)


Harry can convert part or all of the loan into shares.

Harry decides to convert the entire loan on the 360th day. The total amount to convert is £1,090 - principal plus accrued interest. The market price for the shares is 20p so Harry will be issued with 6,055 shares at the discounted price of 18p, with the balance of 10p refunded.

If Harry then goes on to sell the shares at a higher share price he could make a higher return than if he simply redeemed the loan in cash. Of course, this is a riskier course of action as share prices can fall as well as rise.

Remember to do your own research on the company and consider if there is sufficient volume to allow you to sell your shares, when you wish to do so.

Download our full guide to convertible loans here.

Download Guide to Convertible Loans

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Risk Warning

Investment Risks

Investing in small public listed or private companies involves many risks, including illiquidity, lack of dividends, loss of investment and equity dilution. It should be done only as part of a diversified portfolio. Investing in debt pitches through Crowd for Angels (UK) Limited involves lending to companies and therefore your capital is at risk and interest payments are not guaranteed if the borrower defaults. Please click here to read the full Risk Warning.

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Investments on this website are targeted exclusively at investors who are sufficiently sophisticated to understand the risks involved and make their own investment decisions. You will only be able to invest in pitches on this website once you are fully authorised and the investment is deemed appropriate for you.

Basis of Investment

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Forward Looking Statements & Forecasts

Pitches may contain forward looking statements and financial forecasts or projections. Forecasts are not a reliable indicator of future performance. Crowd for Angels makes no judgement or opinion of the likelihood of targets being achieved. 

Lack of FSCS Protection

Investments made in companies listed on the Crowd for Angels platform are not covered by the Financial Services Compensation Scheme (FSCS).

Tax Relief

The availability of any tax relief, including EIS and SEIS, depends on the individual circumstances of each investor and of the company concerned, and may be subject to change in the future. If you are in any doubt about the availability of any tax reliefs, or the tax treatment of your investment, you should obtain independent tax advice before proceeding with your investment.

Innovative Finance ISA

Holding an investment within an innovative finance ISA does not reduce the risks associated with an investment or guarantee returns and it is possible to lose all of the money invested.

This page has been approved as a Financial Promotion by Crowd for Angels (UK) Limited (Company number: 03064807), which is authorised and regulated by the Financial Conduct Authority (Reference number: 176508).