Unsecured Notes | Investment Choices

Unsecured Notes

Sometimes called a promissory note or a straight note, an unsecured note is only guaranteed by the borrower’s promise to pay.

An unsecured note is not backed by any collateral; therefore the lender (the IRA) has no recourse in the event of default, but can choose to take legal action against the borrower.

The note may be as simple as a hand-written agreement, prepared by either the lender, the borrower or a third party—and the terms of the note are determined by these parties.

Once all relevant parties have agreed on the terms, the note is written to spell out the details of the loan, such as loan amount, interest rate, maturity date, late payment penalties, default provisions, etc. The loan may be amortized, interest only, a balloon note, or receiving full payment and interest at maturity.

The borrower signs the note (their signature must be notarized) and the borrower must also provide Polycomp with a Form W-9. Polycomp will hold the original note in safekeeping, unless otherwise requested by the IRA Owner.

Loan Requirements