A business note, also known as a commercial note or business promissory note, is a legally binding debt instrument that documents a loan between a borrower and a lender in a business context. Unlike residential mortgage notes that are secured by personal property, business notes are typically associated with commercial transactions, business financing, or commercial real estate.

Legal Promise to Pay: At its core, a business note represents a formal promise by a business entity to repay a specific amount of money, with interest, by a certain date or according to a defined payment schedule.

Documentation of Terms: The note outlines critical terms such as principal amount, interest rate, payment frequency, duration, and consequences of default.

Security Options: Business notes can be:

• Secured by business assets, equipment, inventory, accounts receivable, or commercial real estate
• Unsecured, backed only by the business's promise to repay

Flexibility: Business notes often feature more customized terms than traditional bank loans, reflecting the specific needs and circumstances of the businesses involved.

• Seller Financing Notes: Created when a business owner sells their company and accepts payments over time rather than a lump sum
• Equipment Financing Notes: Secured by specific business equipment or machinery
• Commercial Real Estate Notes: Secured by office buildings, retail spaces, warehouses, or other commercial properties
• Inventory Financing Notes: Using inventory as collateral for short-term business funding
• Working Capital Notes: Provided to fund day-to-day operations, often with shorter terms

Like residential mortgage notes, business notes can be bought and sold on the secondary market. Note buyers like CG NOTE COMPANY purchase these instruments, often at a discount, providing immediate capital to the note holder while taking on the future payment stream and associated risks.

Business notes represent a significant part of commercial finance, offering flexibility for both the original lenders and borrowers, as well as investment opportunities for note buyers in the secondary market.