what is a loan note

A loan note is a type of financial instrument that represents a contract for a loan, specifying the terms of repayment and often the interest payable. It is similar to a promissory note but with significant differences, especially in terms of tax consequences. Loan notes can be issued by corporate entities as well as individuals for various purposes, such as investing in a company or property transaction. They can also be used as a source of seed capital for new startups and come with appealing tax benefits. Loan notes can be secured against assets or unsecured, and they are often used as a way of investing in a company or property transaction. They are an important instrument in business and finance, providing a way to raise capital without diluting ownership. Additionally, loan notes can have tax benefits for the borrower and can be a convenient source of seed money for new entrepreneurs and startups.