Balloon Promissory Note Template for Saudi Arabia

The Balloon Promissory Note is commonly used in Saudi Arabian financial transactions where parties seek to structure repayment with lower initial periodic payments followed by a substantial final payment. This document type is particularly useful in scenarios where the debtor expects future increased cash flow or asset liquidation. The note must comply with Saudi Arabia's Commercial Papers Law, Banking Control Law, and Islamic finance principles, ensuring the absence of conventional interest (riba) and incorporating Shariah-compliant profit structures. It includes essential elements such as the unconditional promise to pay, payment schedule detailing regular payments and the balloon payment, profit rate calculations, and enforcement provisions. The document is frequently used in commercial financing, asset purchases, and business expansion scenarios where flexible payment structures are beneficial.

1. Promise to Pay: Unconditional promise to pay a specific sum of money, including the total principal amount and the balloon payment amount

2. Payment Schedule: Detailed breakdown of regular payment amounts, due dates, and the balloon payment amount and its due date

3. Interest/Profit Rate: Specification of the Shariah-compliant profit rate or cost-plus structure (avoiding conventional interest)

4. Place of Payment: Specific location or method where payments must be made

5. Default Provisions: Consequences of missing payments or defaulting on the note

6. Acceleration Clause: Circumstances under which the entire amount becomes immediately due and payable

7. Governing Law: Statement that the note is governed by Saudi Arabian law and Shariah principles

8. Maker's Information: Full legal name, address, and identification details of the person/entity making the promise

9. Payee's Information: Full legal name, address, and identification details of the person/entity to whom payment is promised

10. Execution: Date and signature requirements for the maker of the note