Legal Definitions - single-name paper

Single-name paper refers to a financial document, such as a promissory note, where only one individual or entity is legally obligated to make the payment. Crucially, this document is not supported by a co-signer or guarantor who would step in to pay if the original obligor defaults. The entire risk of repayment rests solely with the single party who signed the instrument.

• Example 1: Small Business Loan

  Imagine a sole proprietor, Sarah, who owns a local bakery. She needs a short-term loan to purchase new equipment. She approaches a private lender and signs a promissory note agreeing to repay the loan with interest by a specific date. The note is signed only by Sarah, and no other person or entity (like a spouse or a business partner) has co-signed or guaranteed the debt. If Sarah's bakery faces financial difficulties and she cannot repay, the lender's recourse is solely against Sarah. This promissory note is an example of single-name paper because only one party (Sarah) is the maker, and there is no additional surety.

• Example 2: Personal Loan Between Individuals

  John wants to borrow money from his friend, Maria, to cover an unexpected medical expense. To formalize their agreement, John drafts and signs a promissory note stating the amount borrowed, the agreed-upon interest rate, and the repayment schedule. This note is signed only by John. Maria, the lender, relies entirely on John's promise to pay, without requiring a co-signer or any other form of guarantee from a third party. This note represents single-name paper because it has only one maker (John) and no surety providing additional security for the debt.

• Example 3: Corporate Commercial Paper

  A large, financially stable corporation, "Tech Innovations Inc.," decides to raise short-term capital by issuing commercial paper directly to institutional investors. Each piece of commercial paper is essentially a promissory note from Tech Innovations Inc., promising to repay the investor a specific amount on a future date. These notes are signed solely by Tech Innovations Inc., backed by its own financial strength and assets, and do not involve any external guarantees from a parent company, a bank, or another third party. This commercial paper is an example of single-name paper because the corporation is the sole maker, and there is no additional surety.