Discount Note with Single Payment Schedule for Repayment
(Individual Borrower)


Summary

This template is a discount note that provides for a single payment of principal and interest on maturity of the note and is for use when the borrower is an individual. This template includes practical guidance and drafting notes. The discount note is a way of handling a loan scheduled for a short-term payoff but with a more speculative duration. Interest payments are not separately scheduled for the prescribed life of the note. Instead, the interest is figured into the maturity figure and incorporated into the face amount of the note. In effect, while the bank disburses to the commercial borrower an agreed amount of proceeds, this figure does not appear on the note itself. Rather, the borrower agrees to repay the note at a relatively short but projected distance in a single installment at a figure higher than the amount borrowed, the difference representing the interest on the note. For a template discount note that provides for a security interest in favor of the lender, see Discount...