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A Convertible Loan Note is a flexible financing tool that lets investors lend money to a startup with the option to convert their loan into shares later. It works like a regular loan at first, with interest payments, but transforms into equity when specific events happen - usually during the next major funding round or company sale.

Under Belgian company law, these notes help young businesses access capital without setting a firm company valuation right away. The conversion typically follows pre-agreed terms, with investors often getting discounted shares compared to new investors. This structure protects both the startup's cash flow and the early investor's potential upside, making it popular among Belgian tech ventures and scale-ups.

Consider using a Convertible Loan Note when your startup needs quick funding but setting a valuation feels premature. This tool proves especially valuable during early growth stages when your company's worth remains uncertain, or when you're bridging the gap between major funding rounds.

Belgian startups often turn to these notes when traditional bank loans seem too restrictive and immediate equity sales could undervalue the business. They work particularly well for tech companies with high growth potential but limited current revenue. The note's flexibility helps preserve cash flow while giving investors the security of debt plus the potential upside of equity - making it easier to attract smart money in Belgium's competitive startup ecosystem.

• Simple Convertible Notes: Basic structure with standard interest rate and maturity date, commonly used by early-stage Belgian startups for straightforward funding rounds
• Discount-Only Notes: Offer conversion at a discount to the next funding round without a valuation cap, popular among seed-stage companies
• Capped Notes: Include both a discount and a maximum conversion price, protecting investor upside while maintaining startup flexibility
• Interest-Free Notes: Structured without interest payments but higher conversion discounts, helping preserve startup cash flow
• Bridge Notes: Short-term convertible loans designed specifically to bridge between larger funding rounds, often with accelerated conversion terms

• Startup Founders: Initiate and negotiate the terms, seeking flexible funding without immediately diluting their equity stake
• Angel Investors: Provide early-stage capital while securing the option to convert their investment into shares at favorable terms
• Legal Counsel: Draft and review the note terms, ensuring compliance with Belgian corporate law and protecting both parties' interests
• Corporate Accountants: Handle the financial reporting and tax implications of the convertible loan structure
• Board Members: Approve the terms and oversee the conversion process when triggered by qualifying events

• Company Details: Gather current valuation, financial statements, and corporate registration documents
• Investment Terms: Define loan amount, interest rate, maturity date, and conversion discount percentage
• Trigger Events: Specify conditions that will prompt conversion, like funding rounds or exit events
• Investor Information: Collect legal names, addresses, and tax identification details of all participating investors
• Board Approval: Secure necessary corporate authorizations under Belgian law before finalizing
• Documentation: Use our platform to generate a legally compliant note that includes all mandatory Belgian requirements

• Loan Terms: Principal amount, interest rate, and maturity date clearly stated in euros
• Conversion Mechanics: Detailed conditions triggering conversion and method for calculating share price
• Party Information: Full legal names, addresses, and registration numbers of company and investors
• Security Provisions: Ranking of the loan and any collateral arrangements under Belgian law
• Default Clauses: Specific events constituting default and corresponding remedies
• Governing Law: Explicit reference to Belgian law and jurisdiction for dispute resolution
• Signature Block: Space for authorized representatives with their official capacities noted

A Convertible Loan Note differs significantly from a Loan Agreement in both structure and purpose. While both involve lending money, their outcomes and flexibility vary considerably under Belgian law.

• Investment Purpose: Convertible Loan Notes are designed specifically for startup investments with future equity conversion rights, while standard Loan Agreements focus purely on debt repayment
• Repayment Terms: Loan Agreements require fixed repayment schedules, whereas Convertible Notes often defer payments until conversion or maturity
• Risk Profile: Convertible Notes offer investors potential equity upside, making them more suitable for high-growth startups than traditional loans
• Documentation: Loan Agreements need more extensive security documentation and credit checks, while Convertible Notes focus more on conversion mechanics and startup valuation terms
• Legal Framework: Under Belgian corporate law, Convertible Notes include specific provisions for share conversion, which aren't present in standard loan documentation