What is a promissory note?

[Numero Uno]

Can y'all explain what is a promissory note in simple English?

 

[Black Panther]

A promissory note is a financial agreement or perhaps we could also say it's a financial instrument where a borrower makes a promise to pay back the lender the amount of the loan at an agreed time. It's worth emphasizing that some promissory notes can have interest and collateral security attached to them though.

 

[Numero Uno]

So in other words a promissory note is just a promise to payback the amount you have borrowed from the lender?

 

[Black Panther]

So in other words a promissory note is just a promise to payback the amount you have borrowed from the lender?

Yes, exactly that's what it is. In addition, the lender would record a promissory note as a "note receivable" in their financial Income statement when they issue the promissory note to the borrower.

 

[Numero Uno]

Do you need a lawyer to give someone a promissory note?

 

[Black Panther]

Do you need a lawyer to give someone a promissory note?

Umm, not necessarily as long as both parties agree with the terms stated in the promissory note. But you can get a lawyer to draft a promissory for you and explain the terms included.