Glossary · Your money in the deal
In short
This is a type of investment that starts as debt but can convert into equity (ownership shares) under certain conditions. For a small business acquisition, it's rare and can complicate your ownership structure.
Convertible securities are almost never seen in a small business acquisition financed by an SBA 7(a) loan; they are more common in venture capital or growth equity deals. If you encounter one in the target business's past, ensure you understand its terms and how it impacts current and future ownership percentages. Avoid creating new ones in your acquisition.
Defined by DealRoom.so SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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