Tennessee Promissory Note
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A Tennessee Promissory Note acts like an IOU, only with an official flair. It's a pact between two participants where one side acquires funds from the other, vowing its eventual return. It sketches out vital specifics, such as when to repay and how much interest comes along.
What is the Usury Rate for Tennessee?
Basically, a usury rate is the highest lawful interest that can be tacked onto a loan. If a moneylender piles on more than this number, we deem it "usury", and it's not above board. These numbers shift from state to state, so getting to grips with the rules in your locale is key. Being in the know about the usury rate helps you borrow smart and sidestep possibly tricky predicaments. So, if you're thinking of getting a business loan, this is a number you'd want in your back pocket.
For Tennessee, the maximum rate is 10% unless otherwise expressed in a written contract. (Tenn. Code Ann. § 47-14-103)
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Read on to learn more about Tennessee Promissory Notes, including:
What's included in a Tennessee Promissory Note?
Here are some key components that are typically included in a Tennessee 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" sketches out the exact chunk of change you're dishing out to the business. This part of the document serves a critical role in driving home clarity and fortifying safeguards for everyone involved. To lock in this provision, simply jot down the loan amount in the provided space. Also, make a mental bookmark of "Exhibit A", which is the promissory note, playing the part of the written pledge and the tangible proof of the loan.
In essence—this pivotal clause spotlights the cash you're on the hook for, establishing a crystal-clear base for your promissory note pact.
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 clause maps out the home stretch of your promissory note arrangement. Under 'Closing', you'll stamp down when the deal's going to hit the finish line. You and the other party can choose this date together—it doesn't have to be when you first shake hands on the contract.
On to 'Delivery'. It paints the picture of the handover: the person getting the loan will pass the specified amount to the company. And in a fair trade-off, the company serves them up a fully-baked promissory note spelling out how they'll square the debt. This give-and-take keeps things crystal clear and ensures everyone is on board for the journey.
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 records the company's affirmations about their authenticity concerning crucial facts. They're legally required to keep things spot-on here to sidestep any legal quagmires. Rope in pertinent specifics about the company's money matters, operations or any legal affairs. It's vital for fostering trust and openness in your pact.
a. Organization, Good Standing and Qualification
The Organization, Good Standing and Qualification segment validates the company's lawful standing. Do mention the state where the enterprise got its start, which guarantees that operations run like a well-oiled machine and builds a solid bridge of trust between involved parties.
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 area corroborates the company's lawful capacity to carry out this accord and meet its commitments. In a nutshell, it's saying: "Our business has the legal green light for this arrangement." It's vital for creating a foundation of trust and legal compliance. Be sure to incorporate this provision and understand its implications.
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 field ensures the thumbs-up from the company's shareholders and cements the note's legal standing. It's a significant piece of your contract that confirms all required business steps have been gone through. This clause safeguards both sides and lays a sturdy groundwork for your pact.
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 portion states that your business isn't intentionally bending rules that could jeopardize its operations. Tucking in this provision provides a reassuring pat on the back to everyone involved, confirming your firm's dedication to staying inside the legal lines.
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 portion highlights the loan's purpose—exclusively for business endeavors, not personal whims. This component is key in fostering clear communication and keeping a trust-based relationship with your lenders.
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?
Absolutely, a promissory note can fly solo—no mortgage required. Picture a promissory note as a trusty legal document that outlines the nitty-gritty of your loan. Meanwhile, a mortgage is like a safety net, anchoring the loan against something valuable like property. Promissory notes can show up for both secured and unsecured loans, making it totally feasible to have a promissory note all on its own—an unsecured loan, that is. But hold up— you usually can't swing a mortgage without a promissory note, as it defines how the loan will be paid back, embedding the borrower's vow to square up the debt.
How do you collect from a promissory note?
To retrieve funds from a promissory note, tally up the total due, counting in interest and any extra charges. Reach out to the borrower through a written note. If they fail to respond with a payment, think about knocking on the legal system's door. Make sure you have all paperwork at hand and think about chatting with a legal advisor, as each locality dances to its own legal tune. Steer clear of bothering the borrower excessively, as that could end up being against the law. Always touch base with a legal professional to sidestep any unforeseen blunders.