The Law and Your Business

Securing Capital

What is a promissory note?

A promissory note is a legally binding document in which you set out the terms of the loan: how much you got, the interest rate, how long you have to repay, rate of repayment. You can get forms for promissory notes in stationery stores; some personal finance computer programs have them too. The forms are just the template—you add the terms for your particular agreement by filling in the blanks.

Especially with family and friends, you may be able to tailor the repayment schedule to your needs. If you anticipate not showing much income in the early stages, you can put the periodic payments closer to the end of the loan, or maybe have it all come due at the end. Or you can pay the interest periodically and repay all the principal at the end. Or you can set low periodic payments at the beginning, gradually becoming larger as the term of the loan nears. It's up to you and your angels.

>>What are some ways of securing capital?
>>How about using my home equity to get funds?
>>What are the legal considerations in getting loans from family and friends?
>>What is a promissory note?
>>What are some legal considerations in loans from financial institutions?
>>What about my spouse’s assets?
>>Are government loans available?
>>What about help for women and minorities?
>>What are the legal considerations in getting contributions from others?
>>Legally, what’s the difference between active investors and passive investors?
>>What if I want to have “passive" co-owners?


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