Corporate Note Programs

Corporate Note Programs

A note is an IOU. It is a loan for a fixed period of time for a fixed rate of return. A note may either be backed by assets of the borrower or may simply be backed by their good faith and credit.

The credit quality of a note can be secured or unsecured. Security is provided by the specific assets of the company similar to a mortgage on a home, whereby the lender can take the asset (home) if the loan is not repaid according to the terms and conditions of the loan. An unsecured loan is only as good as the company itself.

Most notes carry higher risk but can also offer a higher rate of return. Notes generally have a short holding period, from 1 to 5 years.