Loan Note

AAA

DEFINITION of 'Loan Note'

An extended form of an IOU from one party to another that enables a payee to receive payments (possibly with interest) over a set period of time, ending with the date at which the entire loan is to be repaid.

Loan notes are usually provided in lieu of cash at the payee's request.

INVESTOPEDIA EXPLAINS 'Loan Note'

A loan note can help an individual investor avoid an undue tax hit resulting from a lump sum payment from a settlement or cash-out package from a company. In these cases, the individual is given a choice between cash or a loan note.

When loan notes are used between businesses, the purchaser is able to act as a borrower and make payments over time, often at a minimal or "at cost" interest rate.

RELATED TERMS
  1. Non-Purpose Loan

    A type of loan that uses an investment portfolio as loan collateral ...
  2. IOU

    An informal document that acknowledges a debt owed. IOU is an ...
  3. Cash Settlement

    A settlement method used in certain future and option contracts ...
  4. Interest Rate

    The amount charged, expressed as a percentage of principal, by ...
  5. Payee

    The party in an exchange who receives payment. A payee is paid ...
  6. Term Loan

    A loan from a bank for a specific amount that has a specified ...
RELATED FAQS
  1. What are the sources of funding available for companies?

    Despite all the differences among companies, there are only a few sources of funds available to all firms. 1. They make ... Read Full Answer >>
Related Articles
  1. Investing Basics

    Will Corporate Debt Drag Your Stock Down?

    Borrowed funds can mean a leg up for companies or the boot for investors. Find out how to tell the difference.
  2. Bonds & Fixed Income

    Evaluating A Company's Capital Structure

    Learn to use the composition of debt and equity to evaluate balance sheet strength.
  3. Personal Finance

    The World's Top 10 Law Firms

    Here is a list of world's top ten law firms in terms of revenue.
  4. Entrepreneurship

    Alternatives To Business Bankruptcy

    Bankruptcy isn't the only alternative for a struggling business. It can try negotiating with creditors or liquidating assets outside the U.S courts.
  5. Retirement

    Power Of Attorney Form

    Be sure that any
  6. Retirement

    Power Of Attorney: Do You Need One?

    Having a power of attorney ensures that you select who will act for you when you are unable to handle your affairs. Without one, the courts decide.
  7. Investing News

    How The Patriot Act Works & Why Is It Important

    The USA Patriot Act gave the government more muscle to fight financial crime after the Sept. 11 terrorist attacks. Here's an overview.
  8. Credit & Loans

    Bankruptcy Consequences

    You've done the deed and are out from under your debts – or embarked on a repayment plan. What consequences can you expect and how long will recovery take?
  9. Credit & Loans

    Saving On Bankruptcy Costs

    Going bankrupt is awful enough without worrying about ways to pay for it. Here's how to save on lawyers, filing fees and other inevitable costs.
  10. Credit & Loans

    When To Declare Bankruptcy

    When is bankruptcy the best or only route– and when is it better to look at alternative solutions? And should you always hire a lawyer?

You May Also Like

Hot Definitions
  1. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  2. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  3. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  4. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
  5. Preference Shares

    Company stock with dividends that are paid to shareholders before common stock dividends are paid out. In the event of a ...
  6. Accrued Interest

    1. A term used to describe an accrual accounting method when interest that is either payable or receivable has been recognized, ...
Trading Center