Promissory Note: Is It Right For Your Business?
Setting up a business takes a lot of careful planning, but more importantly it takes just the right amount of funding. When going through the initial steps of establishing a new business, sorting through the different loan options and funding opportunities can be extremely confusing. Among those options, you may have heard of companies offering promissory notes as a way to put off large bills. So, what exactly is a promissory note?
What is a Promissory Note?
Put most simply, a promissory note is a financial instrument where the issuer promises a certain sum of money to the payee, typically with a fixed “pay by” date indicated. Also typical, is that these notes carry a number of conditions that must be met. These notes are often preferred by business owners because it allows them to avoid getting a loan while still getting the product or service they need. Depending on your industry, this could mean getting a piece of equipment you need to make money; once you have it, you can pay it off thanks to the profits.
It is important to realize that a promissory note is legally binding, so if you fail to pay on time you could end up with much more than you bargained for. When you are in doubt about whether this is the right course of action, you may wish to consult with a Boston business attorney to consider all possible options.
Should You Use a Promissory Note?
Depending on your financial situation and your ability to obtain the proper funding, a promissory note can sometimes be exactly what your business needs to get started. Just keep in mind the obligation you are making and ensure that you can pay the bill when it comes due. The last thing you want is to make a financial obligation and not be able to follow through. This hurts your business reputation, and can make it difficult to get future deals.
If you can find a business that will allow you to pay with this sort of note and you are confident you can make the payment on time, it is certainly something to consider, especially when your business is just getting started. When you find that you have questions about a promissory note and wish to consult with a Boston business attorney on ways to ensure you get the best loan opportunities, contact Jeffrey Cymrot of Sassoon & Cymrot for individual guidance and consultation.