Record a convertible loan note
Record a convertible loan note's conversion terms against its loan facility, and see what it would convert into at a funding round.
Screenshots are retaken from IQ Entities on every release. Updated 14 October 2026.
A convertible loan note is debt today and shares after the next qualifying round. Its money is a loan, so IQ Entities records it against a loan facility; the note adds the terms that a plain loan cannot hold: the discount, the valuation cap, the qualifying financing and how it ranks.
Record the loan first
The note needs the loan facility the money was advanced under. If the company does not have one yet, open Transactions under Securities, choose the Debt tab and choose New loan to record the facility and its drawdown. The principal and interest rate live on the facility.
Record the note
Open the company and choose Convertible Instruments under Securities in its sidebar, then choose Record note.
Choose the Facility and enter the Issue date, and the Maturity date if the note has one. Add the Instrument reference from the note itself.
Enter the Discount %, the Valuation cap and the Qualifying financing amount, as the note states them. Leave the cap empty for an uncapped note.
Choose what it Converts at and Converts into, its Ranking on insolvency, and tick Most-favoured-nation clause if the note has one. Choose Record note.
Model a conversion
Choose the actions button at the end of the note's row.
Choose Model a conversion.
Enter the Conversion date, the Round price per share and the New money in the round, then choose Compute conversion. IQ Entities shows the principal, the interest accrued to that date, the discount and cap prices, and the number of shares the note would convert into.
Nothing is written: no shares are issued and the register does not move.
Tips from practice
- A note with a most-favoured-nation clause takes the best terms of any later note, so IQ Entities records it but does not price its conversion.
- When the round completes and the note converts, record the conversion as an allotment so the new shares reach the register. See Record an allotment of shares.
- To see what the conversion does to everyone's percentage alongside the round itself, model both in a scenario. See Model a funding round.