what s included in a promissory note 
a promissory note should include all the details about a loan and the repayment terms in addition to the names of the borrower and the lender a promissory note may also include 3types of promissory notesin the united states promissory notes are often used when getting a student loan mortgage or a loan from a friend or family member promissory notes are also sometimes issued to corporate clients many people sign their first promissory notes as part of getting a student loan private lenders typically require students to sign promissory notes for each loan taken out some schools allow federal student loan borrowers to sign a one time master promissory note allowing receipt of multiple loans for up to 10 years if the school certifies the student s continued eligibility student loan promissory notes outline the student borrower s rights and responsibilities and the loan s conditions and terms by signing a master promissory note for federal student loans the student promises to repay the loan amounts plus interest and fees to the u s department of education 4the master promissory note also includes the student s personal contact and employment information as well as the names and contact info for the student s references homeowners usually consider their mortgage an obligation to repay the money they borrowed to buy their residence but actually the signed mortgage promissory note represents a promise to repay the mortgage or loan along with the repayment terms typically the promissory note includes 5the promissory note describes the debt s amount interest rate and late fees a lender holds the promissory note until the mortgage loan is paid off unlike the mortgage or deed of trust the promissory note is not entered into county land records promissory notes are commonly used in business as a means of short term financing for example when a company sells products but hasn t yet collected payments cash may run low leaving the company unable to pay creditors the company may ask creditors to accept a promissory note to be exchanged for cash after the company collects its accounts receivables 2or the company may ask the bank for cash in exchange for a promissory note promissory notes offer companies a credit source after exhausting other options like corporate loans or bond issues a note issued by a company in this situation is at a higher risk of default than say a corporate bond the corporate promissory note s interest rate will likely provide a greater return than a bond from the same company as high risk means higher potential returns 6these notes must be registered with the government in the state where sold and with the securities and exchange commission sec 6if the note is not registered the investor has to analyze whether the company is capable of servicing the debt companies in dire straits may hire high commission brokers to push unregistered promissory notes on the public if the company defaults the investors legal avenues may be somewhat limited promissory note repaymentthere are several different structures for repayment of a promissory note but most involve repaying the principal plus interest the interest rate can be fixed or variable and calculated daily monthly annually or in another way in some states interest rates may be capped by state law 7 a certified accountant and attorney can advise you on the tax or legal implications of the promissory note s repayment schedule 2here are various repayment approaches for a promissory note 8investing in promissory notescompany or corporate promissory notes are rarely sold to the public 9 when they are it is usually at the behest of a struggling company working through unscrupulous brokers who are willing to sell promissory notes that the company may not be able to honor alternatively the promissory note may be part of a scam sold by life insurance agents or online or out of state investment advisors some sellers may know nothing about the investments true origins the promissory notes may be for companies that don t exist promissory notes promising low risk high yield investments may lead to a type of fraud according to the sec 10before investing in promissory notes ensure all of the following are true 6investing in promissory notes involves risk these promissory notes are only offered to corporate or sophisticated investors who can handle the risks and have the money needed to buy a note to help minimize these risks an investor must register the promissory note or have it notarized so that the obligation is publicly recorded and legal a brief history of promissory notespromissory notes have had an interesting history at times they have circulated as a form of alternate currency free of government control in some places the official currency is a form of promissory note called a demand note one with no stated maturity date or fixed term allowing the lender to decide when to demand payment promissory notes and bills of exchange are governed by the 1930 geneva convention of uniform law on bills of exchange and promissory notes 11 its rules stipulate that the term promissory note should be inserted in the instrument s body and contain an unconditional promise to pay 