What is a Promissory Note?
Promissory notes may also be referred to as an IOU, a loan agreement, or just a note. A promissory note, sometimes referred to as a note payable, is a legal instrument, in which one party promises in writing to pay a determinate sum of money to the other, either at a fixed or determinable future time or on demand of the payee, under specific terms. The note records information about how much was lent (the principal amount), interest rates, when the payment is due (maturity date), when and where it was issued, and signatures.
A promissory note is also referred to as a:
- Commercial paper
- Demand Note
- Debt Note
- IOU
- Note payable