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Promissory Note template

A promissory note is a written promise by a borrower to repay a specific sum of money to a lender, on set terms covering interest, repayment dates, and what happens if payments are missed.

Replace everything in [BRACKETS], export to PDF, then send it for signature.

1. Parties and Principal Amount

For value received, [BORROWER NAME], residing or located at [BORROWER ADDRESS] (the "Borrower"), promises to pay to [LENDER NAME], residing or located at [LENDER ADDRESS] (the "Lender"), the principal sum of [PRINCIPAL AMOUNT AND CURRENCY] (the "Principal"), together with interest as set out below. This Note is dated [DATE].

2. Interest

Interest accrues on the unpaid Principal from [INTEREST START DATE] at a rate of [INTEREST RATE]% per year, calculated on a [simple / compound] basis. [ALTERNATIVE: This Note bears no interest.] In no event shall the interest rate exceed the maximum rate permitted by applicable law; any excess shall be applied to reduce the Principal.

3. Repayment

The Borrower shall repay this Note as follows: [CHOOSE ONE: (a) in a single lump-sum payment of all Principal and accrued interest on MATURITY DATE; or (b) in NUMBER equal INSTALLMENT FREQUENCY installments of INSTALLMENT AMOUNT, beginning on FIRST PAYMENT DATE, with the final payment of all remaining amounts due on MATURITY DATE]. Payments shall be made by [PAYMENT METHOD] to [PAYMENT DETAILS].

4. Application of Payments and Prepayment

Payments are applied first to any late fees, then to accrued interest, and then to Principal. The Borrower may prepay all or part of this Note at any time without penalty. Prepayment does not postpone or reduce any later installment unless the Lender agrees in writing.

5. Late Payment

If any payment is more than [GRACE PERIOD, e.g. ten (10)] days late, the Borrower shall pay a late fee of [LATE FEE AMOUNT OR PERCENTAGE], to the extent permitted by law.

6. Default and Acceleration

The Borrower is in default if: (a) any payment is not made within [DAYS] days after its due date; (b) the Borrower becomes insolvent or files for bankruptcy; or (c) the Borrower breaches any other term of this Note. On default, the Lender may, by written notice, declare the entire unpaid Principal and accrued interest immediately due, and the Borrower shall pay reasonable collection costs, including legal fees, to the extent permitted by law.

7. Security

[CHOOSE ONE: This Note is unsecured. / This Note is secured by DESCRIPTION OF COLLATERAL under a separate security agreement dated DATE.]

8. Waivers and Transfer

The Borrower waives presentment, demand, protest, and notice of dishonor to the extent permitted by law. Any delay by the Lender in exercising a right is not a waiver of that right. The Lender may assign this Note with written notice to the Borrower; the Borrower may not assign its obligations without the Lender's written consent.

9. Governing Law

This Note is governed by the laws of [GOVERNING LAW JURISDICTION]. If any provision is held unenforceable, the remaining provisions remain in effect. This Note may only be amended in writing signed by the Borrower and the Lender.

10. Signatures

The Borrower and Lender agree that this Note may be signed electronically, and that electronic signatures have the same effect as handwritten signatures. BORROWER: [BORROWER NAME] Signature: ____________________ Date: [DATE] LENDER: [LENDER NAME] Signature: ____________________ Date: [DATE] [OPTIONAL] CO-SIGNER / GUARANTOR: [CO-SIGNER NAME] Signature: ____________________ Date: [DATE]

When to use this template

  • When lending money to a friend, family member, or colleague
  • When a business owner lends money to their own company, or vice versa
  • When a buyer pays part of a purchase price in installments to a seller
  • When you want a simple, one-page record of a debt instead of a full loan agreement

How to fill it in and get it signed

  1. Enter the borrower's and lender's names and addresses, the date, and the principal amount.
  2. Set the interest rate, or state that the note is interest-free, and check it against local usury limits.
  3. Choose lump-sum or installment repayment and fill in the dates, amounts, and payment details.
  4. Fill in the late fee, default period, security details, and governing-law jurisdiction.
  5. Upload the note to eSignSimple and send it to the borrower, lender, and any co-signer for e-signature.

This template is general information, not legal advice. Laws differ by country and state; have a lawyer review contracts with high stakes.

Frequently asked questions

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

A promissory note is usually a short, one-sided promise by the borrower to repay. A loan agreement is longer and sets out obligations for both parties, such as conditions, covenants, and representations.

Is a promissory note legally binding?

A properly drafted and signed promissory note is generally an enforceable written promise to pay. Enforceability depends on local law, including rules on interest rates and formalities.

Should I charge interest on a loan to a family member?

That's a personal choice, but in some countries interest-free or below-market loans can have tax consequences. A tax advisor can tell you whether that applies to you.

Can a promissory note be signed electronically?

Many jurisdictions accept electronic signatures on promissory notes, though rules can differ for negotiable instruments. eSignSimple records an audit trail with timestamps, IP addresses, and a document hash for each signature.