Promissory note loans


Promissory note loans

Loans at advantageous conditions

Promissory notes play a key role as an alternative to loans in the development of new financing structures. They serve as evidence of the existence of the claim for the lender. Promissory notes are a form of credit and a means of long-term debt financing for companies. They are an important and frequently used alternative to traditional bank loans and corporate bonds, especially for German SMEs, as they combine the advantages of both forms of financing. The promissory note, as a capital market loan, is the German equivalent of the US private placement and has similar advantages: competitive prices, longer terms, access for SMEs, diversification of the investor base, no formal rating requirements.

Promissory note loans as a diversification option alongside traditional bank loans

The INFINMENT team has already successfully supported and executed several promissory note transactions. The process of structuring and placement with suitable partners/investors involves a number of complex activities which are mastered by the INFINMENT management team. INFINMENT acts as a consultant and coordinator for the technical implementation of a promissory note transaction.

Advantages for companies/issuers:

  • Company can diversify its existing financing structure
  • Generally no collateral required
  • Moderate covenant structure can be negotiated
  • Capital is usually structured without the use of funds
  • Terms of between 2-10 years possible as standard
  • Standardised contracts
  • Interest rate depends on credit rating

Implementation criteria/overall data for the raising of capital:
  • Annual revenue (consolidated) of at least EUR 50 million
  • Objective of raising capital of at least EUR 5 million
  • Company’s registered office can be located anywhere worldwide
The information listed above can serve as an initial guide and should be developed further in a discussion with our management team if need be. You should then be in a better position to assess the pros and cons of this product in order to make a sound decision.

The low transaction costs compared to a corporate bond issue, as well as the relatively quick and straightforward provision make promissory note loans so attractive.

For more information or to speak to a contact directly, please use our contact form.

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