Free Promissory Note Template
A promissory note setting loan amount, interest, repayment schedule, late fees, prepayment, default, acceleration and optional collateral or guarantee.
A promissory note is a written promise to repay a loan on set terms: principal, interest, payment schedule and what happens on default. Interest must stay within your state's usury limits, and any collateral should be documented in a separate security agreement.
Fill in this template online
Answer the blanks, choose the options, see a live preview and download your completed document. Free, no account needed.
PROMISSORY NOTE
Principal amount: $[AMOUNT]
Date: [DATE]
Place: [CITY, STATE]
1. PROMISE TO PAY. For value received, [BORROWER NAME], [ADDRESS] ("Borrower"), promises to pay [LENDER NAME], [ADDRESS] ("Lender"), the principal sum of $[AMOUNT], plus interest as set out below.
2. INTEREST. Interest accrues on the unpaid principal at [RATE]% per year, calculated on a [365-day year / 30/360 basis], from the date of this Note until paid in full. The interest rate will not exceed the maximum permitted by applicable law; any excess will be applied to principal.
3. REPAYMENT. Borrower will repay this Note as follows [choose one]:
(a) Installments: [NUMBER] equal monthly payments of $[AMOUNT], including principal and interest, beginning [DATE] and on the same day of each month thereafter, with any remaining balance due on [MATURITY DATE].
(b) Interest-only then balloon: monthly interest-only payments beginning [DATE], with all principal and unpaid interest due on [MATURITY DATE].
(c) Single payment: all principal and interest due on [MATURITY DATE].
A payment schedule is attached as Schedule A.
4. PAYMENT METHOD. Payments will be made to Lender at [ADDRESS OR BANK DETAILS] and applied first to late charges, then accrued interest, then principal.
5. PREPAYMENT. Borrower may prepay all or part of this Note at any time without penalty. Partial prepayments will [reduce the remaining payments / shorten the term].
6. LATE CHARGE. If a payment is more than [10] days late, Borrower will pay a late charge of [5]% of the overdue payment, not exceeding the maximum permitted by law.
7. DEFAULT. Borrower is in default if: (a) any payment is more than [15] days late and remains unpaid [10] days after Lender gives written notice; (b) Borrower becomes insolvent or files for bankruptcy; or (c) Borrower breaches the security agreement, if any.
8. ACCELERATION AND REMEDIES. On default and after any required notice, Lender may declare the entire unpaid balance and accrued interest immediately due. Interest after default will accrue at [RATE]% per year, within legal limits. Borrower will pay Lender's reasonable collection costs, including attorney's fees, to the extent permitted by law.
9. SECURITY [OPTIONAL]. This Note is secured by [DESCRIBE COLLATERAL] under a security agreement dated [DATE]. [If unsecured: This Note is unsecured.]
10. GUARANTEE [OPTIONAL]. Payment is guaranteed by [GUARANTOR NAME] under a separate guaranty dated [DATE].
11. WAIVERS. Borrower waives presentment, demand and notice of dishonor, to the extent permitted by law, but not any notice of default required by Section 7.
12. GOVERNING LAW. This Note is governed by the laws of [STATE].
13. SEVERABILITY AND ASSIGNMENT. If any provision is unenforceable, the rest remains in effect. Lender may assign this Note on notice to Borrower.
BORROWER: ____________________ Date: __________
[CO-BORROWER, IF ANY]: ________ Date: __________
LENDER: ______________________ Date: __________
SCHEDULE A: Payment schedule
| Payment # | Date | Payment | Interest | Principal | Balance |
|---|---|---|---|---|---|
---
This free template is provided by ClauseAudit for general informational purposes and is not legal advice. Have it reviewed before use. Replace all [BRACKETED] placeholders.When to use this template
- Lending money to a friend, family member or business.
- A business borrowing from an owner or investor.
- Documenting seller financing for a sale.
How to fill it in
- Enter principal, interest rate and calculation method, and check your state's usury limit.
- Choose one repayment option and attach a payment schedule.
- Set late charge and default notice periods.
- Decide whether the loan is secured; if so, sign a separate security agreement.
- Add a guarantee only with a separate signed guaranty.
Key clauses to check
- Interest and usury
- Rates above your state's legal maximum can make the note unenforceable or expose the lender to penalties.
- Default and acceleration
- A notice and cure period protects the borrower from immediate acceleration.
- Prepayment
- A no-penalty clause lets the borrower pay early.
- Security
- Collateral needs a security agreement and, for business assets, often a UCC filing.
Frequently asked questions
Is a promissory note legally binding?
Yes, if properly signed and supported by consideration, such as the loan itself.
What interest can I charge on a personal loan?
It depends on your state's usury laws. For family loans, very low rates can also have tax consequences under IRS rules.
Does a promissory note need to be notarized?
Usually not, although notarization can help prove the signature.
Want to check if a contract is fair before you sign?
If someone sent you a mca & business loan contract, don't guess. We flag risky clauses in plain English, tuned to your state, with a downloadable report and suggested-fix redline.
More Business templates
This free template is general information, not legal advice, and is no substitute for a qualified attorney. Laws vary by state; have it reviewed by a lawyer before you use or sign it.