Note

Written By:
Paul Tracy
Updated September 30, 2020

What is a Note?

In the finance world, a note is debt.

How Does a Note Work?

Notes are typically medium-term debt, but not always. For example, Treasury notes (T-notes) are intermediate-term bonds issued by the U.S. Treasury. They mature in two, three, five or 10 years.

You might hear people use the phrase "carry the note," which means to take on debt from another issuer. For example, let's say you plan to purchase a business for $2 million. You have only $200,000 in cash for the seller and want to pay the seller over time for the rest. Essentially, you're borrowing $1.8 million from the seller, and the seller is "carrying a note" until you pay back that $1.8 million.

Why Does a Note Matter?

There are many kinds of notes: municipal notes, Treasury notes, bank notes, promissory notes, etc. Like all debt, the terms vary, including the interest rates, face values, maturities and other provisions.