North Carolina Promissory Note
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A North Carolina Promissory Note is basically an IOU sporting a fancy suit. It's a pact between two players—where one borrows cash from the other and pledges to return it. It lays out all the nitty-gritty, such as when you'll pay back and what's the interest due.
What is the Usury Rate for North Carolina?
In simpler terms, a usury rate is the highest lawful interest rate for a loan. If a lender exceeds this rate, it's labeled "usury" and isn't allowed. Since the rates differ from state to state, being clued in on the rules in your region is crucial. Being in the know about usury rates ensures responsible borrowing and dodging any sticky situations. So, it's certainly a handy figure to keep in mind if you think of getting a business loan.
For North Carolina, loans less than $25,000, the maximum is the amount announced on the 15th of each month by the North Carolina Commissioner of Banks. For loans greater than $25,000, the parties may agree in writing to any amount. (N.C. Gen. Stat. § 24-1.1)
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Read on to learn more about North Carolina Promissory Notes, including:
What's included in a North Carolina Promissory Note?
Here are some key components that are typically included in a North Carolina Promissory Note:
- Amount and Terms of the Loan
- Closing and Delivery
- Representations, Warranties the Company
- Organization, Good Standing and Qualification
- Corporate Power
- Authorization
- Compliance with Laws
- Use of Proceeds
1. Amount and Terms of the Loan
"The Loan" spells out the exact sum of cash you'll loan the business. This part matters because it guarantees straightforwardness and safety for everyone involved. To wrap up the provision, simply plug in the loan digits in the blank spot. Plus, keep an eye on "Exhibit A", where the promissory note stands as the written vow and proof of the loan.
In a nutshell—this crucial section shines a light on the dough you're investing, laying a transparent groundwork for your promissory note deal.
The Loan. Subject to the terms of this Agreement, Purchaser agrees to lend to the Company at the Closing $_________ (“Loan Amount”) against the issuance and delivery by the Company of a promissory note for such amount, attached as EXHIBIT A (“Note”).
2. Closing and Delivery
The CLOSING AND DELIVERY provision marks the homestretch of your promissory note deal. In the Closing part, you'll pinpoint when the deal wraps up. This day can be a joint decision, it doesn't have to be the day the contract was born.
Delivery outlines the give-and-take: the borrower moves the loan amount to the enterprise and the business, in turn, hands them the finished promissory note, recording the borrower's duty to pay back. This two-way swap confirms everything's above board and everyone's on board.
CLOSING AND DELIVERY
Closing. The closing of the sale and purchase of the Notes (the “Closing”) will be held on the Effective Date, or at such other time as the Company and Purchasers may mutually agree (such date is referred to as the “Closing Date”).
Delivery. At the Closing (i) Purchaser will deliver to the Company a check or wire transfer funds in the amount of the Loan Amount; and (ii) the Company will issue and deliver to Purchaser a Note in favor of Purchaser payable in the principal amount of Purchaser’s Loan Amount.
3. Representation, Warranties The Company
This part comprises the company's declarations about being truthful in regard to essential specifics. They're legally obliged to remain accurate to dodge potential legal hiccups. Toss in pertinent info about the company's money matters, daily activities, or legal concerns. Building trust and keeping things crystal-clear in your agreement is what it's all about.
a. Organization, Good Standing and Qualification
The Organization, Good Standing, and Qualification segment verifies the company's legal standing. Jot down the state where the business is set up, guaranteeing a hitch-free operation and fostering confidence among all involved.
Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of [State]. The Company has the requisite corporate power to own and operate its properties and assets and to carry on its business as now conducted and as proposed to be conducted. The Company is duly qualified and is authorized to do business and is in good standing as a foreign corporation in all jurisdictions in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a material adverse effect on the Company or its business.
b. Corporate Power
The Corporate Power segment affirms the business's legal capacity to carry out the agreement and meet its responsibilities. It essentially declares, "Our business holds the legal authority for this arrangement." It's vital for building confidence and ensuring you're on the right side of the law. So, make certain this provision is in place and crystal-clear.
Corporate Power. The Company has all requisite corporate power to execute and deliver this Agreement, to issue the Note and to carry out and perform its obligations under the terms of the Note.
c. Authorization
The Authorization portion guarantees the business's stakeholder consent and the note's lawfulness. It's an essential piece of your contract, confirming all required company steps have been taken. This clause safeguards both sides and lays a strong groundwork for your arrangement.
Authorization. All corporate action has been taken on the part of the Company, its directors and its stockholders necessary for the authorization of the Note and the execution, delivery and performance of all obligations of the Company under the Note. The Note, when executed and delivered by the Company, will constitute valid and binding obligations of the Company enforceable in accordance with its terms, subject to laws of general application relating to bankruptcy, insolvency, the relief of debtors.
d. Compliance with Laws
The Compliance with Laws segment states that your enterprise is not intentionally flouting any laws that might put it in a pickle. Incorporating this clause soothes everyone involved, signaling your enterprise's dedication to stay within the boundaries of the law.
Compliance with Laws. To its knowledge, the Company is not in violation of any applicable statute, rule, regulation, order or restriction of any domestic or foreign government or any instrumentality or agency in respect of the conduct of its business or the ownership of its properties, which violation would materially and adversely affect the business, assets, liabilities, financial condition or operations of the Company.
e. Use of Proceeds
The Use of Proceeds segment declares the loan is solely for business operations, not for personal spendings. It's key to keeping everything open and earning the trust of the individuals lending the funds.
Use of Proceeds. The Company will use the proceeds of the Note for the operations of its business, and not for any personal, family or household purpose.
Can a promissory note be used without a mortgage?
Indeed, a promissory note can fly solo without a mortgage. Picture a promissory note as a signed pledge specifying your loan agreement's nitty-gritty. Meanwhile, a mortgage is like a safety belt, strapping the loan to an asset—say a property. Now, promissory notes aren't picky—they can work with both tethered (secured) and free-flying (unsecured) loans. So yes, you can have a promissory-only deal—that's your classic unsecured loan. But the reverse, a mortgage without a promissory note? Not really. That’s because the note is the core screenplay—it explains when and how payments should roll in and captures the borrower's sworn promise to return the loan.
How do you collect from a promissory note?
To recover funds from a promissory note, tally the entire amount due, counting interest and charges. Reach out to the borrower through written means. If payment isn't forthcoming, ponder taking legal steps. Double-check all paperwork and look for legal advice, as rules vary by area. Steer clear of pestering the debtor—this may cross legal lines. Touch base with a legal professional to steer clear of slip-ups.