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Promissory Note

Promissory Note

  • Term

    Main definition

  • Promissory Note

    Sometimes called simply "notes," the term refers to written promise to pay, a document that evidences a debt obligation to the holder. The instrument specifies, among other things, the principal amount, applicable interest rate, covenants, events of default, and maturity. The company issuing a mote in this case is referred to as the obligor (the party that owes an "obligation" to the "obligee") or the maker, and the person advancing the funds is referred to as the holder (or purchaser) or payee. Longer-term instruments that are notes are sometimes called debentures.

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