Promissory Note

A borrower’s written promise to repay a loan on set terms. Fill in the amount, rate and schedule, send one link, and the borrower completes and signs it.

A promissory note is the borrower’s signed promise to repay a specific sum, with interest, on a stated schedule. The lender holds it as evidence of the debt and can enforce it if the borrower stops paying.

Sign in to use this template · Set the few terms only you can, reword anything, and send it to be filled in and signed. The people you send to never need an account.

What it covers

When to use it

What it does not do

Signing, witnesses and delivery

The agreement

This Promissory Note (the "Note") is made on [Date the loan is made] by [Borrower full name], of [Borrower address] ("Borrower"), in favor of [Lender full name], of [Lender address] ("Lender"). For value received, Borrower promises to pay Lender the principal sum of [Principal amount] (the "Principal"), together with interest and any other amounts due under this Note, on the terms below. Borrower and Lender are each a "Party" and together the "Parties".

1. Promise to Pay

Borrower acknowledges receipt of the Principal from Lender and unconditionally promises to pay Lender, or Lender’s order, the Principal and all interest, fees and costs due under this Note in lawful money of the United States, without setoff, deduction or counterclaim. This Note is not a gift and Borrower’s obligation to repay does not depend on any event other than the passage of time.

2. Interest

The unpaid Principal shall bear simple interest from the date of this Note at the rate of [Annual interest rate (%)] percent per year, calculated on the actual number of days elapsed over a 365-day year. Interest does not compound. If the rate stated is zero, no interest accrues while Borrower is not in default. In no event shall the interest charged under this Note exceed the maximum rate permitted by applicable law; any excess shall be applied to reduce the Principal and, if the Principal has been paid, refunded to Borrower.

3. Payment Schedule

Borrower shall repay this Note as follows: [Repayment schedule].

(a) If monthly installments: Borrower shall pay [Installment amount (or $0 for lump sum)] on [First payment due] and on the same day of each month after that until [Maturity date (final payment)] (the "Maturity Date"), when the entire unpaid Principal, accrued interest and any other amounts due shall be paid in full.

(b) If a lump sum: no periodic payments are required. The entire Principal, accrued interest and any other amounts due shall be paid in full on the Maturity Date.

(c) If interest-only with a balloon: Borrower shall pay accrued interest of [Installment amount (or $0 for lump sum)] on [First payment due] and on the same day of each month after that, and shall pay the entire Principal together with any remaining interest in a single balloon payment on the Maturity Date.

Payments shall be made by [How payments are made], or as Lender otherwise directs in writing. Each payment shall be applied first to any late fees and costs then due, then to accrued interest, and then to Principal. If a payment date falls on a Saturday, Sunday or legal holiday, payment is due on the next business day.

4. Late Fee

If any payment is not received within [Grace period before a late fee (days)] days after it is due, Borrower shall pay Lender a late fee of [Late fee per missed payment] for that payment. The late fee compensates Lender for the cost of handling a late payment and is not interest. Acceptance of a late payment or a late fee does not waive Lender’s right to treat a later late payment as a default.

5. Prepayment

Borrower may prepay all or any part of the Principal at any time without penalty or premium. A partial prepayment shall be applied to Principal and, unless Lender agrees otherwise in writing, shall not postpone the due date or reduce the amount of any scheduled installment; it shortens the time to payoff instead. Interest stops accruing on any amount of Principal on the day it is paid.

6. Security

This Note is: [Secured or unsecured]. If secured, the collateral is described as follows: [Collateral description (or "None")] (the "Collateral"). Borrower grants Lender a security interest in the Collateral to secure payment of this Note, and shall sign any security agreement, deed of trust, title application or financing statement Lender reasonably requests to perfect that interest. Borrower shall keep the Collateral insured and free of other liens until this Note is paid in full. If this Note is unsecured, this Section does not apply and Lender relies on Borrower’s general credit.

7. Events of Default

Each of the following is an "Event of Default": (a) Borrower fails to make any payment within fifteen (15) days after it is due; (b) Borrower fails to perform any other obligation under this Note or any document securing it and does not cure the failure within ten (10) days after written notice from Lender; (c) Borrower becomes insolvent, makes an assignment for the benefit of creditors, or becomes the subject of a bankruptcy or receivership proceeding; (d) any representation Borrower made to Lender to obtain this loan proves to have been materially false; or (e) if this Note is secured, the Collateral is sold, transferred, encumbered, damaged beyond repair or seized without Lender’s written consent.

8. Acceleration and Remedies

Upon an Event of Default, Lender may, by written notice to Borrower, declare the entire unpaid Principal, all accrued interest and all other amounts due under this Note immediately due and payable, without further presentment, demand or protest. From the date of an Event of Default until the default is cured or this Note is paid in full, the unpaid balance shall bear interest at the rate stated in Section 2 plus five (5) percentage points per year, but never more than the maximum rate permitted by law. Lender may exercise any remedy available at law or in equity, including, if this Note is secured, any remedy of a secured party in the Collateral. Lender’s remedies are cumulative and Lender’s failure or delay in exercising any of them is not a waiver.

9. Collection Costs

Borrower shall pay on demand all reasonable costs Lender incurs in enforcing or collecting this Note after an Event of Default, including collection agency fees, court costs and reasonable attorney fees, whether or not a lawsuit is filed. These costs are added to the amount due under this Note and bear interest at the default rate.

10. Waivers

Borrower and every endorser or guarantor of this Note waive presentment for payment, demand, notice of dishonor, notice of nonpayment, protest and notice of protest, and consent to any extension of time, renewal, release of any Collateral or of any other person liable, or other indulgence Lender may grant, without notice and without affecting their liability. No waiver by Lender is effective unless in writing, and a waiver on one occasion is not a waiver on any other.

11. Assignment; Successors

Lender may assign or transfer this Note without Borrower’s consent, and the assignee shall have every right of Lender under it. Borrower may not assign its obligations under this Note. This Note binds Borrower’s heirs, personal representatives and successors and benefits Lender’s successors and assigns.

12. Governing Law; Entire Agreement; Severability

This Note is governed by the laws of the State of [Governing law (state)], without regard to its conflict-of-laws rules. It is the entire agreement between the Parties about this loan and supersedes all prior discussions and writings. It may be amended only in a writing signed by Borrower and Lender. If any provision of this Note is held invalid or unenforceable, that provision shall be enforced to the fullest extent permitted and the rest of this Note remains in effect. Time is of the essence.

13. Electronic Signatures; Counterparts

This Note may be signed electronically and in counterparts, each of which is an original and all of which together are one instrument. The electronic execution record, timestamps and document fingerprints kept by the signing platform are conclusive evidence of execution and delivery. Lender signs below to acknowledge the terms; Borrower’s signature alone makes this Note binding on Borrower.

Signatures

Lender · Borrower

Promissory Note FAQ

What is the difference between a promissory note and a loan agreement?

A promissory note is the borrower’s one-sided promise to pay and is usually short. A loan agreement is a fuller two-sided contract with the lender’s obligation to fund, the borrower’s representations and covenants, and detailed events of default. For a simple loan between people, the note is enough. For a business loan or one with conditions on funding, use the Loan Agreement in this library, which often has a note attached to it.

How much interest can I charge?

Whatever you agree, up to your state’s usury limit. The limits vary widely: some states allow any rate the parties put in writing, others cap personal loans at 8%, 10% or 12% a year, and a few treat interest above a threshold as a crime. Loans between family members are often at the IRS applicable federal rate to avoid gift-tax questions. If you are not sure, choose a rate under 10% and check your state.

Which payment schedule should I pick?

Monthly installments suit most personal loans: a fixed amount each month until paid. A lump sum at maturity suits a short bridge loan where the borrower expects money on a date. Interest-only with a balloon keeps the monthly payments small and defers the principal to the end, which is common in seller financing. The note prints the choice you make and the dates you give.

Can I leave the interest rate or the schedule blank for the borrower?

Yes. Any blank you leave becomes a field the borrower fills in when they open the link, and you see what they entered before you sign. Most lenders fill in the principal, rate, schedule and late fee and leave only the borrower’s name, address and email for the borrower to complete.

What does acceleration mean?

If the borrower misses a payment or another event of default happens, the lender can declare the entire remaining balance due at once instead of waiting for each installment. The note gives the borrower a short cure period first. Without an acceleration clause, the lender could only sue for the installments already missed.

Should the note be secured?

A secured note names collateral the lender can take if the borrower defaults, which makes the loan safer and usually justifies a lower rate. An unsecured note relies on the borrower’s promise alone. Choose secured only if you are prepared to complete the separate lien paperwork; naming collateral in the note without a filed security agreement or title lien gives the lender a contract right but not priority over other creditors.

Is a promissory note enforceable if the borrower is a relative?

Yes. The relationship does not matter; what matters is that the note states a definite sum, a definite repayment obligation and is signed by the borrower. Family loans fail in court most often because there was no writing at all, or because the lender treated the money as a gift for years before demanding it back.

Related templates

This template is general information, not legal advice. Laws differ by state; review anything important with a lawyer.

Promissory note