# Convertible Debt/Note

Convertible debt (aka convertible notes) is a type of bond that the holder can convert into a specified number of shares of common stock in the issuing company or cash of equal value. Convertible debt allows startups to raise money while delaying valuation until the company is more mature.

As its name suggests, convertible debt is a loan and may accrue interest. Accrued interest can be calculated in different ways, depending on the language in the purchase agreement. The accrual details on a convertible promissory note specify the methodology for calculating the number of days between two dates. We support the three most common methods for calculating interest:

Per annum - calculates the daily interest using the actual number of days in the year and then multiplies that by the actual number of days elapsed in each time period.

Actual/360 - calculates the daily interest using a 360-day year and then multiplies that by the actual number of days elapsed in each time period.

Actual/365 - calculates the daily interest using a 365-day year and then multiplies that by the actual number of days elapsed in each time period.