A promissory note is a legally binding document outlining the terms of a loan between a lender and a borrower. It’s more formal than a simple IOU and provides crucial protection for both parties. It details the amount borrowed, repayment schedule, interest rate (if any), and consequences of default. Using a well-drafted promissory note template ensures clarity and minimizes potential disputes, making it a vital tool for various lending situations, from personal loans to small business financing.
Whether you’re lending money to a friend, family member, or business, a promissory note protects your investment and establishes clear expectations. The following examples cover various scenarios, from simple loans between individuals to more complex secured and unsecured agreements. Each template provides a framework for customization to fit your specific needs. Remember to consult with legal counsel for advice tailored to your situation.
22 Sample Promissory Notes
1. Simple Promissory Note
For basic loans between individuals.
I, [Borrower’s Name], promise to pay [Lender’s Name] the sum of [Amount] on or before [Date].
2. Installment Promissory Note
Outlines repayment in regular installments.
I, [Borrower’s Name], promise to pay [Lender’s Name] the sum of [Amount] in [Number] installments of [Amount] each, commencing on [Date].
3. Demand Promissory Note
Repayment due upon lender’s demand.
I, [Borrower’s Name], promise to pay [Lender’s Name] the sum of [Amount] on demand.
4. Secured Promissory Note (with Collateral)
Loan secured by an asset.
This note is secured by [Description of Collateral]. If I, [Borrower’s Name], default, [Lender’s Name] may seize the collateral.
5. Unsecured Promissory Note
Loan not backed by collateral.
This is an unsecured promissory note. [Borrower’s Name] promises to repay [Lender’s Name] the sum of [Amount] as per the agreed-upon terms.
6. Promissory Note with Interest
Includes an interest rate.
I, [Borrower’s Name], promise to pay [Lender’s Name] the sum of [Amount] with interest at a rate of [Percentage]% per annum.
7. Promissory Note without Interest
Clearly states no interest is charged.
No interest shall accrue on the outstanding balance of this loan. I, [Borrower’s Name], promise to pay [Lender’s Name] the sum of [Amount].
8. Promissory Note for Business Loan
Tailored for business lending.
[Business Name], promises to pay [Lender’s Name] the sum of [Amount] for [Purpose of Loan] as per the attached schedule.
9. Promissory Note for Personal Loan
Suitable for loans between friends/family.
I, [Borrower’s Name], promise to pay [Lender’s Name] the sum of [Amount] for [Reason for Loan].
10. Promissory Note with Late Payment Penalty
Specifies a penalty for late payments.
A late payment penalty of [Amount or Percentage]% will be charged for any payment received more than [Number] days after the due date. I, [Borrower’s Name], promise to pay [Lender’s Name] the sum of [Amount].
11. Promissory Note with Prepayment Clause
Allows for early repayment without penalty.
[Borrower’s Name] may prepay the outstanding balance in full or in part at any time without penalty. I, [Borrower’s Name], promise to pay [Lender’s Name] the sum of [Amount].
12. Promissory Note with Acceleration Clause
Allows lender to demand full payment upon default.
If [Borrower’s Name] defaults on any payment, [Lender’s Name] may declare the entire outstanding balance immediately due and payable. I, [Borrower’s Name], promise to pay [Lender’s Name] the sum of [Amount].
13. Promissory Note with Governing Law Clause
Specifies the jurisdiction governing the agreement.
This promissory note shall be governed by and construed in accordance with the laws of [State/Jurisdiction]. I, [Borrower’s Name], promise to pay [Lender’s Name] the sum of [Amount].
14. Promissory Note with Severability Clause
Ensures the rest of the agreement remains valid if one part is deemed unenforceable.
If any provision of this promissory note is held to be invalid or unenforceable, the remaining provisions shall remain in full force and effect. I, [Borrower’s Name], promise to pay [Lender’s Name] the sum of [Amount].
15. Promissory Note with Waiver Clause
Specifies that no delay in enforcing rights constitutes a waiver.
No delay or omission on the part of [Lender’s Name] in exercising any right or remedy shall operate as a waiver thereof. I, [Borrower’s Name], promise to pay [Lender’s Name] the sum of [Amount].
16. Promissory Note with Attorney’s Fees Clause
Specifies who is responsible for legal fees in case of a dispute.
In the event of a dispute, the prevailing party shall be entitled to recover reasonable attorney’s fees. I, [Borrower’s Name], promise to pay [Lender’s Name] the sum of [Amount].
17. Promissory Note with Confession of Judgment Clause
(Consult legal counsel – this clause can be very powerful) Borrower consents to judgment being entered against them in case of default.
[Borrower’s Name] irrevocably consents to the entry of a judgment against them in any court of competent jurisdiction in the event of a default. Consult legal counsel before including this clause. I, [Borrower’s Name], promise to pay [Lender’s Name] the sum of [Amount].
18. Promissory Note for Real Estate
Loan secured by a property.
This note is secured by a deed of trust on the property located at [Property Address]. I, [Borrower’s Name], promise to pay [Lender’s Name] the sum of [Amount].
19. Promissory Note with Co-Signer
Includes a co-signer who is also responsible for the debt.
[Co-signer’s Name] agrees to be jointly and severally liable for the debt. I, [Borrower’s Name], promise to pay [Lender’s Name] the sum of [Amount].
20. Promissory Note with Guarantor
Includes a guarantor who will pay if the borrower defaults.
[Guarantor’s Name] guarantees the repayment of this debt in the event of [Borrower’s Name]’s default. I, [Borrower’s Name], promise to pay [Lender’s Name] the sum of [Amount].
21. Master Promissory Note (for Student Loans)
Typically used for multiple student loans.
This Master Promissory Note governs all future loans made to [Borrower’s Name] under the [Loan Program]. I, [Borrower’s Name], promise to pay [Lender’s Name] the sum of [Amount].
22. Short-Term Promissory Note
For loans with a very short repayment timeframe (e.g., under a year).
I, [Borrower’s Name], promise to pay [Lender’s Name] the sum of [Amount] on or before [Date]. This is a short-term loan agreement.
Conclusion
Using promissory note templates can streamline the lending process and provide a solid foundation for financial agreements. However, it’s crucial to remember that these templates are general guidelines. Always tailor the note to your specific situation and, when dealing with significant sums or complex arrangements, consult with an attorney to ensure the document is legally sound and protects your interests. A properly drafted promissory note minimizes risks and promotes a healthy lender-borrower relationship.
