Most high-dollar-value business loans involve the use of a promissory note. Common financing transactions involving use of promissory notes include bank financing of expensive industrial equipment and inventory. Businesses may also use promissory notes if they finance their customers' purchases. A promissory note provides many advantages whether the business is acting as a lender or borrower.
Promissory Notes (Definition)
A promissory note is a financial instrument that contains a written promise by one party (the note's issuer or maker) to pay another party (the note's payee) a definite sum of money, either on demand or at a specified future date. A promissory note typically contains all the terms pertaining to the indebtedness, such as the principal amount, interest rate, maturity date, date and place of issuance, and issuer's signature.