A promissory note template is a legal document containing a written promise to pay a specific amount of money to a certain individual at a particular date as well as agreed terms and conditions. This note will assist the parties as a negotiable tool which usually includes some crucial terms of written promise. A promissory note template is also demonstrated as a financial instrument which serves as a bidding between two or more parties. The terms associated with this commercial instrument contain principal amount, interest rate, parties to the note, date, terms of payment, maturity date and sometimes, rights of the payee in case of any dispute. A promissory note form is a commercial document. Therefore, it must be prepared professionally as well as must be signed by both parties.
Benefits of Promissory Note:
The promissory note format is basically noted as an official statement that will legally explain that one party will pay a sum of money to another party within a specified period of time, well the time maybe demanded by the other party within the approach of law. In simple words, we can also call this document a binding document which obviously has legal accession. However, the vital objective of this note is to give a considerable amount of time to another party to arrange some money for repayment. The promissory note format which is provided in this post, is our best example of high quality. No matter whether you are using it for personal purpose or business purpose, you should try to make the necessary changes in its format, design and in content.
Why Promissory Note is Required?
Financial transactions always seek protection either in terms of security or bond. It is always hard for lenders to provide financial assistance without security or guarantee. Various risk hazards are involved in such transactions where it becomes necessary to secure repayment with proper documentation. Moreover, it is not possible for every lender to judge borrowers before lending. A promissory note secures both parties with their concerns and makes sure all terms are followed throughout the life of an agreement. It makes business easy and acceptable even in financial crises where people need financial assistance from financial institutions or firms. Moreover, it contains a special segment about payment details, including its due dates where it is clearly mentioned.
Different Types of Promissory Note:
A promissory note is basically prepared to facilitate financial transaction where both parties required security. Their mutual consent on agreement defines what kind of promissory note is being taken. As per standards, there are no different types of promissory note. However, as per general business practices, the following are a few kinds which we can observe in the general market. These are given below;
1- Single Payment Promissory Note: It is a standard promissory note where the borrower will make full and final payment as per the due date agreed by all the parties. Usually, it is secured by tangible or non-tangible asset of the borrower. A due date is finalized based on different elements and events. It becomes an automatic due to an occurrence of such an event, if the final date arrives.
2- Installment based Promissory Note: These are those promissory notes where the borrower accepts financial assistance against an equal or multiple installment plan. Going for an installment plan means borrowers will undertake interest rate and other constraints as imposed by the lender. It helps borrowers to divide the loan burden into different parts and pertaining dates. Moreover, the borrower can use his/her working capital in production or business to generate revenue alongside of loan repayments.
3- Partial Balloon Payments Promissory Note: This method is used by borrowers to make payments in two or three balloon payments. Usually this method is taken into account where seasonal business is used to make repayments. Instead of making one big payment, borrowers go for multiple payments with lesser interest rate. It is a very effective type of promissory note because borrowers can easily manage funds with seasonal cash flows.
Purpose of Promissory Note:
A promissory note template is used to prepare different kind of formats which can be used for multiple motives. A fundamental purpose of any note is to secure a lender’s payment in case where the borrower fails to repay the amount. Other purposes of this format are given below for your ease;
1- A perfect format discloses necessary information related to loan amount and other relevant contents.
2- Comprehensive details of the parties which are involved in this transaction.
3- If you wish to secure payment with security, either a tangible or non-tangible asset, then you can opt for a secured promissory note against a mortgage or pledge.
4- Other contents involved in payment due date and extension of period in case of multiple tranches or installments.
5- It is used to negotiate the rate of interest applied or composed as per the terms of the transaction.
6- It is a fully secure and legal note which can be persuaded in any court of law in case of any emergency need arises.
7- A promissory note forces the parties of the transaction to fulfill all terms as agreed. Thus, make sure all necessary precautions are taken into account and remain intact till life of note.
8- It is not a fixed note and the terms agreed by all the parties are convertible or transferable. Therefore, it provides ease in managing transaction related affairs.
Templates for Promissory Note:
Free Promissory Note Template
Promissory Note Template PDF
Second Promissory Note Template
Legal Promissory Note Template
Promissory Note Agreement Template
Promissory Note Sample
Commercial Promissory Note Template
Lender Endorsement Promissory Note Template
Private Promissory Note Template
Official Promissory Note Template
Promissory Note Example
National Promissory Note Template
Loan Agreement Promissory Note Template
On Demand Promissory Note Template
Convertible Promissory Note Template
Transferable Promissory Note Template
