Convertible loan note calculator
A convertible loan note is a loan that turns into shares at the next round. The loan plus interest converts at the lower of the cap price and the discounted round price.
The formula
Loan note = (Loan + interest) ÷ the lower of the cap price and the discounted round price
Worked example: 96,429 shares
The example uses the guide's seed round, £200,000 for 20%, with a matching cap table, exit, fund and market.
- Loan £50,000 + interest = £54,000
- Converts at £0.56 a share (the discounted price): 96,429 shares
Work out your loan note
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Loan note conversion for the example
Example96,429
shares
- Loan £50,000 + interest = £54,000
- Converts at £0.56 a share (the discounted price): 96,429 shares
- Shares from a converting loan do not normally qualify for SEIS or EIS.
Formula: (Loan + interest) ÷ the lower of the cap price and the discounted round price.
- Share of the company
- 6.3%
- Interest added
- £4,000
Everything your numbers show
For the example business: 27 of 27. Type your own figures to replace them. Select one for its page.
- Valuation£1,000,000post-money
- Pre-money valuation£800,000
- Post-money valuation£1,000,000
- Equity20.0%Equity sold
- Dilution70.0%kept by existing shareholders, down from 100.0%
- Option pool142,857new pool shares
- Fully diluted60.0%Fully diluted ownership
- SAFESimple agreement for future equity89,286shares
- Loan note96,429shares
- Pro rata rights£200,000Pro rata amount
- Liquidation preference£1,000,000to the investor
- Vesting180,000after 18 months
- Cliff120,000at month 12
- SEISSeed Enterprise Investment Scheme£10,000
- EISEnterprise Investment Scheme£6,000
- VCTVenture capital trust£4,000
- TAMTotal addressable market£240,000,000a year
- SAMServiceable available market£60,000,000a year
- SOMServiceable obtainable market£3,000,000a year
- Down roundDown round
- Up roundDown round
- Flat roundDown round
- MOICMultiple on invested capital2.80x
- IRRInternal rate of return22.9%a year
- TVPITotal value to paid-in capital1.50x
- DPIDistributions to paid-in capital0.40x
- Dry powder£24,000,000
How to read your result
Interest adds to the shares: 8% a year on a note that converts after a year converts 8% more money.
Watch out for
If the note reaches its maturity date before a round, it may have to be repaid or renegotiated.
Last checked . Estimates only, not financial, tax or legal advice: check your accounts and documents, and take advice before you act. More terms in the startup glossary.