Virginia Promissory Note
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A Virginia Promissory Note is like your friendly neighborhood IOU, only dressed up in its legal best. Picture two pals striking a deal: one borrows some cash and vows to return it. This note spells out all the nitty-gritty—think repayment timeline and any interest added.
What is the Usury Rate for Virginia?
Picture a usury rate as the legal speed limit for loan interest rate - it's the absolute maximum that can be applied. If a lender accelerates beyond this speed limit, they're entering the zone of "usury," essentially a no-go highway in the lending world. Keep in mind that these speed limits change state by state, so know your regional rules. Familiarizing yourself with the usury rate is like strapping on the seatbelt for responsible borrowing, helping to dodge unwanted accidents. So, it's an essential little number to keep handy in your financial glove box, particularly if you're thinking about securing a business loan.
For Virginia, the legal rate of interest is 6%. With a contract in place, the maximum interest rate is 12%. (Va. Code Ann. § 6.2-301 and Va. Code Ann. § 6.2-303)
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Read on to learn more about Virginia Promissory Notes, including:
What's included in a Virginia Promissory Note?
Here are some key components that are typically included in a Virginia 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" section is effectively your money map—it lays out the exact dollars you're loaning to the company. This bit isn't just important, but a lifesaver, as it provides a crystal clear picture and safety net for everyone involved. Sealing the deal is as simple as filling up the blank with the loan amount. Meanwhile, don't miss the side-note called "Exhibit A"—that's your promissory note, like your money vow and loan proof, all in one.
In simpler words—a vital note stress-lighting your financial contribution, solidifying the groundwork of your promissory note agreement.
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 is essentially the confetti cannon at the end of your promissory note agreement's ride. Under "Closing," you'll dot down the date when the money shuffle wraps up. This day is more of a team agreement, not necessarily when the deal was sealed in black and white.
"Delivery" is like the grand finale: it's all about how the cash swaps sides—the borrower sends the loan over to the company, and the company trades back the fully filled out promissory note, acting as the borrower's pinky promise to repay. It's the grand finale of give and take that keeps everything above board and shows commitment from all the players involved.
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 captures the company's honest confessions about all the essential info—the stuff they're legally tied to, keeping it clear and precise to dodge any legal hiccups. Jot down the necessary bits like the company's money situation, how they roll, or legal stuff that's relevant. Trust and transparency are the dynamic duo that hold the key to a smooth-sailing agreement.
a. Organization, Good Standing and Qualification
The "Organization, Good Standing and Qualification" part is like the company's legal ID card—it stamps the company's legal standing. Pop in the name of the state where the business is set up, ensuring a hitch-free operation and fostering a circle of trust among all 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" chunk gives the company a legal high five to carry out this agreement and meet its commitments. It's like the company saying, "Hey, we're totally legal to jump into this deal." It's like the corner brick of trust and lawfulness—so, be sure to slip this provision in and ensure it's as clear as your morning coffee.
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" piece gives the nod to the company's stakeholder thumbs-up and stamps the note's legal status. It's the heart of your contract—double-checking that all must-do company steps have been danced. This little number guards both parties and lays down a sturdy launchpad for your agreement.
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" part says your business isn't purposely bending any rules that could trip it up. Slip in this clause to give everyone a warm and fuzzy feeling that your company is playing by the book, legally speaking.
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 is all about earmarking the loan strictly for business matters, not personal fun. It's the trusty compass for keeping everything clear and honest, and keeping your lenders feeling secure and respected.
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?
Sure, a promissory note and a mortgage are like muffins and jam—you can totally have one without the other. Think of a promissory note as a pinky promise in writing—it spells out the loan shorthand. On the other side, a mortgage is your safety net; it pins down the loan to something solid like a property. Now, our friend the promissory note can roll with both unsecured and secured loans. So, you can have a lone ranger promissory note (read: unsecured loan) without a mortgage right by its side. But a mortgage playing solo without a promissory note is the stuff of rainbows and unicorns. Why so? The promissory note sets the payback rules—it's the borrower's "yes, I'll pay you back" in writing.
How do you collect from a promissory note?
So, let's say you're ready to scoop up what's due from a promissory note. Start by totting up the grand total—don't forget the interest and fees. Shoot an email or letter to the borrower. If they turn a deaf ear, it might be high time to bring in the legal cavalry. Keep all your paperwork in your toolkit and buddy up with a lawyer—remember, each area plays by its own set of rules. Steer clear of badgering the borrower—you don't want to wade into any illegal waters. Tip of the day? Keep a lawyer on speed dial to avoid stepping on any legal landmines.