The Promissory Note With Balloon Payment is commonly used in Canadian lending transactions where traditional equal payment structures don't meet the parties' needs. This document is particularly useful in situations where borrowers expect increased future cash flows or asset liquidation to handle the balloon payment. It's governed by Canadian federal legislation, including the Bills of Exchange Act and Interest Act, along with applicable provincial laws. The note typically includes the principal amount, interest rate, regular payment schedule, balloon payment terms, default provisions, and any security arrangements. It's essential for business financing, real estate transactions, and other scenarios where deferred payment structures are advantageous. The balloon payment feature makes it particularly suitable for businesses with seasonal income or projects with delayed revenue generation.
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1. Parties: Identification of the Lender (Payee) and Borrower (Maker) with full legal names and addresses
2. Promise to Pay: Clear statement of the principal amount, promise to repay, and basic terms including the date of execution
3. Interest Rate: Specification of the interest rate, calculation method, and compliance with Canadian Interest Act requirements
4. Payment Terms: Regular payment schedule including amount, frequency, and due dates of regular payments
5. Balloon Payment: Specific terms of the balloon payment including amount and due date
6. Prepayment Rights: Terms regarding the borrower's right to prepay and any applicable penalties
7. Default: Definition of events of default and consequences, including acceleration of the debt
8. Notice: Requirements for providing notices between parties
9. Governing Law: Specification of applicable Canadian jurisdiction
10. Amendment: Terms for modifying the note
1. Security Interest: Include when the note is secured by collateral, specifying the nature and terms of the security
2. Guarantee: Include when there is a guarantor for the note
3. Late Charges: Include when specific late payment penalties are to be imposed
4. Assignment: Include when the note may be assigned to other parties
5. Insurance Requirements: Include when insurance on collateral is required
6. Tax Provisions: Include when specific tax considerations need to be addressed
7. Co-Borrower: Include when there are multiple borrowers on the note
1. Payment Schedule: Detailed schedule showing all regular payment dates, amounts, and the balloon payment
2. Amortization Table: Table showing the amortization schedule including interest and principal allocation for each payment
3. Security Description: Detailed description of any collateral securing the note (if applicable)
4. Guarantor Agreement: Terms of guarantee if a guarantor is involved (if applicable)
Authors
Relevant legal definitions
Clauses
Relevant Industries
Financial Services
Real Estate
Banking
Commercial Lending
Private Lending
Small Business
Construction
Agriculture
Manufacturing
Equipment Financing
Relevant Teams
Legal
Finance
Credit
Risk Management
Treasury
Commercial Lending
Compliance
Collections
Business Development
Real Estate Finance
Relevant Roles
Chief Financial Officer
Finance Manager
Credit Manager
Loan Officer
Commercial Lending Officer
Financial Analyst
Legal Counsel
Corporate Lawyer
Risk Manager
Treasury Manager
Collections Manager
Account Manager
Business Development Manager
Real Estate Finance Manager
Compliance Officer
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