What is a promissory note, and what terms are normally included in promissory notes?

What is a promissory note, and what terms are normally included in promissory notes?

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June 23, 2021
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What is a promissory note, and what terms are normally included in promissory notes?

Answer and ExplanationSolution by a verified expert

Explanation

In a promissory note, funding is raised from anyone other than a bank. A promissory note is a legal agreement that specifies the terms and conditions of the loan. The terms and conditions of the agreement include the amount, repayment, tenure, interest rate, etc.

Sample Response

A promissory note is an instrument that contains a written promise by one party to pay another party a definite sum of money. The terms included in the note are as follows:

Amount
Maturity
Interest rate
Interest only vs. amortized
Frequency of interest payments
Discount interest
Add-on loans
Collateral
Restrictive covenants
Loan guarantees

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