A lump sum promissory note is the simplest form of repayment, because the money is all paid back at one time, the end of the note’s term. So there is no checking to see if the monthly payment comes on time and if it meets the required amount. This form of repayment basically requires the least amount of maintenance from the lender.

The lump sum promissory note may be an ideal structure to use when lending money to family and friends, because it also takes the burden off of the borrower to come up with the money right away. So if you’re lending to a family member to start a business, for example, it gives him time to get his business off the ground and start generating income, without having the added financial burden of making payments right away. Or perhaps you’re lending money to a friend to fix her car, and she intends to pay you back at the end of the year when her bonus comes in. A lump sum repayment structure would be ideal for that scenario.

A promissory note with a lump sum repayment structure must include the amount borrowed, the date the loan is to be repaid, and if or what interest is also owed on the note at that time. The note should also address other standard issues, like what happens if the note is not paid on time and if the note is secured by any personal property or real estate.