Promissory Note

A promissory note is a signed document containing a written promise to pay a stated sum to a specified person or the bearer of the promissory note at a specified date or event, or on a demand. A promissory note evidences a debt owed, whether to a company or a person. Promissory notes usually are signed only by the debtor, but they can be signed by both the debtor and the creditor. To secure payment on a note, sometimes the debtor on the note will agree to put something of value up as collateral, in case the debtor is unable to pay the note. Collateral usually includes some sort of property, whether real property or personal property. As an example of personal property, the debtor may offer tangible assets, such as property, equipment, or furniture, to cite some generic examples, or the debtor may offer intangible assets, such as equity in a corporation or rights to intellectual property. Creditors of a promissory note may also demand further assurances from the debtor in the form of a guarantee. For example, if the debtor on the note is an entity, then the creditor may require that an individual also personally guarantee the repayment of the amount due under the note.