What is a promissory note?

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We have all heard of the promissory note concept, or failing that of a derivative called “promissory note discount”. In this post we solve all your doubts about what is a promissory note and we help you make the decision about whether it is really what you need. 

What is a promissory note

The term promissory note refers to a credit title that promises to pay an amount to a beneficiary with a date limit. 

This is a credit title since the holder may demand payment within the terms that have been agreed for the issuance of the document. 

Usually The following subjects are involved in the issuance of a promissory note: 

  • Transmitter: is the person who agrees to pay the agreed amount
  • Beneficiary: is the recipient of the amount, the person who receives the document that commits the issuer.
  • Guarantor: There are occasions in which a third party intervenes in the credit title of the promissory note. This person is in charge of guaranteeing that the agreed amount will be paid. 

He promissory note discount It is a good option that should be taken into account by companies or people who need obtain immediate liquidity without waiting for the date to expire maturity of the original promissory note. 

Characteristics of the Promissory Note

  • it's literal: The payment request will be carried out under the agreed guidelines in the document. The pay must be collected on the agreed date with the agreed amount previously. Yeah after the issuance of the promissory note, are performed other deals or extensions, they will not be effective if they are not stipulated at the time of the agreement.
  • is transferable: It's possible change the beneficiary of the promissory note. The new beneficiary will become the responsible for demanding payment within the stipulated time since it will be the new owner of the document. 
  • It's abstract: The promissory noteIt can always be charged unless the document is rejected or destroyed when the deal ends. If it is not destroyed, the issuer may face a commercial lawsuit. 
  • Need for incorporation: To demand payment of a promissory note, the document has to exist and be able to teach it. That is, it must be something tangible.

Conclusion

Have you already decided if the Promissory Note is what you need? At Alter Finance we put at your service our financial advice to help you take the course you need and get the liquidity or financing you are looking for for your projects. 

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