A promissory note is a credit instrument in which a person or company, the subscriber, promises to pay unconditionally a specified sum of money to another, the beneficiary, on a specific date and place. For a company it is a common tool for short-term financing and for backing trade debts.
Its strength lies in its simplicity: one document, two parties and a promise to pay that, if breached, allows a claim through a faster legal route than that of an ordinary contract. Let's see what the law requires, how it differs from other instruments and how a company seeking liquidity uses it.
Requirements of a promissory note
Each country regulates promissory notes under its own law, but almost all agree on a core set of formal requirements. For reference, in Mexico it is regulated by the Ley General de Títulos y Operaciones de Crédito (article 170) and in Spain by the Ley 19/1985, Cambiaria y del Cheque (article 94):
| Requirement | Mexico (LGTOC) | Spain (Ley Cambiaria) |
|---|---|---|
| Designation | Statement that it is a promissory note in the text | Designation of promissory note in the text, in the language of the document |
| Promise | Unconditional, to pay a specified sum | Pure and simple, to pay a specified amount |
| Payee | Name of the person to whom payment is made | Name of the person to whom or to whose order payment is made |
| Maturity and place of payment | Time and place of payment | Maturity and place of payment |
| Issuance | Date and place of signing | Date and place of signature |
| Signature | Of the maker or of the person signing on their behalf | Of the signatory |
Both laws provide supplementary rules for some data: for example, if no maturity date is stated, the promissory note is considered payable at sight. Other requirements, such as the unconditional promise or the signature, do not allow substitution. Before signing or accepting promissory notes in another country, check local law: limitation periods, default interest and the collection route change.
Promissory note, bill of exchange and cheque
All three are negotiable instruments, but they work differently. The fundamental difference is that the promissory note is a promise to pay, while the bill of exchange and the cheque are orders to pay directed to a third party.
| Aspect | Promissory note | Bill of exchange | Cheque |
|---|---|---|---|
| Nature | Promise to pay | Payment order | Payment order to a bank |
| Parties | Maker and beneficiary | The issuer, the party that must pay it and the beneficiary | Account holder, bank and beneficiary |
| Who pays | The maker itself | The obligated party that accepts it | The bank, with funds from the account holder |
| Maturity | Agreed date or at sight | Agreed date or at sight | At sight |
| Typical business use | Credit and term debt | Trade with suppliers | Immediate payments |
To obtain financing, the promissory note is the most direct: the company that signs it is the debtor and it does not depend on a third party accepting the order.
How a company uses the promissory note
- Short-term bank loans. Many working capital loans are documented with a promissory note signed by the company in favour of the bank.
- Deferred-payment sales. A client signs a promissory note in favor of the company, which can keep it or discount it at a financial institution to obtain liquidity in advance.
- Issuances in series. Medium and large companies place promissory notes among investors on the securities market. In Spain, corporate promissory notes exist; in Mexico, short-term debt instruments are usually placed as certificados bursátiles.
The appeal is clear: maturities of months, not years, and an instrument the market knows. The limit too: outside the bank, placing promissory notes among several investors requires going through the securities market, with its fixed costs.
From paper promissory note to tokenized promissory note
That is where tokenization comes in. A promissory note issued in series is a negotiable security, and in the European Union it can be represented in distributed ledger technology. In Spain, the registry of those securities is maintained by an ERIR, a legal figure created by article 8 of the Ley 6/2023 and developed by the RD 814/2023 (we explain it in what an ERIR is). As it is a financial instrument, MiCA does not apply (article 2.4) and securities regulations govern.
| Aspect | Traditional promissory note | Tokenized promissory note |
|---|---|---|
| Investors | Usually one: the bank or the client | Several investors |
| Registry | Signed document or book-entry record | Distributed ledger maintained by an authorized entity |
| Transfer | Endorsement | Transfer in the registry |
| Payment at maturity | Manual presentation and collection | Can be automated |
| Applicable framework | National negotiable instruments law | Securities market regulations |
For the offering, the Prospectus Regulation allows, from June 5, 2026, offerings of up to 12 M€ exempt from a prospectus (more detail in what the CNMV prospectus is). Tokenization does not eliminate KYC, documentation, or the issuer's responsibility; what changes is the issuance, registry, and payment operations.
If your company operates in Latin America, also review tokenization for Latin American issuers. For structure, components, and a practical case, continue with our guide on tokenized promissory note for short-term financing.
Does your company need working capital for a few months and wants to know if a tokenized promissory note fits? Take the issuance diagnosis (2 min) or request a proposal.
This content is informative and educational. It does not constitute legal, tax, or investment advice. Check the current version of each regulation in the BOE and on EUR-Lex.
HokenFi is a software and infrastructure provider; it does not provide regulated services (CASP, ESI, EAF, or ERIR). This article is informative and does not constitute financial or legal advice.
Frequently asked questions
What is a promissory note and what is it used for?
A promissory note is a credit instrument in which the maker promises to pay unconditionally a specified sum to a beneficiary, on a specific date and at a specific place. Companies use it to document short-term bank loans, support deferred-payment sales, and, in the case of medium and large companies, place short-term debt among investors on the securities market.
What is the difference between a promissory note and a bill of exchange?
A promissory note is a promise to pay: the person who signs it is the one who must pay, and there are two parties, the maker and the beneficiary. A bill of exchange is an order to pay: the person who issues it orders a third party to pay the beneficiary, so three parties are involved. To obtain financing, a promissory note is more direct because it does not depend on a third party's acceptance.
Can a promissory note be tokenized?
Yes, when it is issued in series as a negotiable security. In Spain it can be represented in distributed ledger technology with an ERIR, under article 8 of Ley 6/2023 and RD 814/2023. Securities regulations apply, not MiCA. Tokenization facilitates issuance, registry, and automated payment at maturity, but it maintains the issuer's reporting and KYC obligations.
