What Is A Promissory Note? The Ultimate Guide To Business Loans

Since ancient times, the concept of promissory notes has facilitated trade. From the Han dynasty in China, the Code of Hammurabi, and the Roman Empire to the modern marketplace, these documented agreements are a practical yet straightforward way to finance business transactions.

Across the globe, today’s companies use promissory notes to provide a legal safeguard when lending and paying back sums of money.

Their usage is prevalent in North America.

Below, you will find an explanation of precisely what promissory notes are, along with their main features and some examples of their usage.

Definition of promissory notes

According to the generally accepted definition, a promissory note is an unconditional pledge to pay a sum of money to either a named party or the note holder — or deposit that sum as directed. It takes the form of a written or printed document signed by the promise maker.

It is possible to use a promissory note in various contexts, such as mortgages for residential and commercial property purchases. Other uses include business, personal, and student loans.

What to include in a promissory note