Convertible Loan Agreement

A convertible loan agreement (CLA) is a loan that has the option to be converted into shares at a future point in time and frequently during the company’s next funding round. Theoretically, investors can ask to have a CLA repaid in cash; this is the biggest difference between a CLA and an ASA/SAFE which is an equity-only investment. That said, the difference is theoretical given that repayment rarely happens in actuality.