What is a Note?
In the finance world, a note is debt.
How Does a Note Work?
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.