Ingram’s Features Article On Convertible Notes: Authored by John Kennyhertz

Ingram’s Features Article On Convertible Notes: Authored by John Kennyhertz

When assessing business financing options, there is one solution that has been growing in popularity over the last few years. John Kennyhertz, a Kansas City business attorney, addresses the benefits of convertible notes and how it works to provide funding for a business. With security and payment terms, convertible notes give investors the ability to lend money, while also giving them a chance to share in the company’s ownership. John breaks down the framework of a convertible note and what it can do for a business and its investors.

“A convertible note is a security under federal and state securities laws. Therefore, in order to take advantage of Rule 506(d) of the Securities Act of 1933, the company should make sure their investors our accredited investors and that anyone the company is paying to help raise capital is a registered broker dealer. As a security, a convertible note is first and foremost a loan. A loan, which traditionally has principal, interest, a term, repayments and amortization. However, a convertible note is primarily short-term debt (usually a year or 2) in which the investor receives an option to convert this debt into ownership in the borrower entity. The conversion can work both ways. This means that the investor usually has the option to convert it prior to the maturity and forgo the repayment of the debt or it automatically converts to equity if the debt has not been paid by the maturity date.”

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About Kennyhertz Perry, LLC

Kennyhertz Perry, LLC is a business and litigation law firm representing clients in highly regulated industries. The firm was founded by two veteran Kansas City attorneys, John Kennyhertz and Braden Perry. To learn more about the firm, visit

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