What are promissory notes?

A promissory note is like a promise to pay money back someday, just like when you borrow a toy from your friend and say you'll return it later.

Imagine you want to buy a new bike, but you don’t have enough coins. Your dad says he’ll lend you the money, but you need to write him a little note saying you’ll pay him back in 3 weeks. That note is your promissory note, it's proof that you promised to give him the money back.

When someone writes a promissory note, they're saying, “I promise to pay you X amount of money on a certain date.” This can happen between friends, family, or even businesses. The person who borrows the money is called the maker, and the one who lends it is called the payee.

If you don’t pay back on time, your dad might remind you, just like he might say, “Don’t forget your promise!”A promissory note is like a promise to pay money back someday, just like when you borrow a toy from your friend and say you'll return it later.

Imagine you want to buy a new bike, but you don’t have enough coins. Your dad says he’ll lend you the money, but you need to write him a little note saying you’ll pay him back in 3 weeks. That note is your promissory note, it's proof that you promised to give him the money back.