Does a promissory note need to be notarized?

No, a promissory note does not need to be notarized to be legally binding in the United States. It is enforceable upon signature by the borrower. However, notarization or witnessing can make it easier to prove the document's authenticity and prevent a borrower from denying they signed it, which can be valuable in court proceedings.

What interest rate should I use?

The appropriate interest rate depends on your situation. For personal loans between friends or family, a rate between 2-6% is common. For private business loans, market rates typically range from 5-15% depending on risk. Always check your state's usury laws for the maximum allowable rate. For below-market loans between family members, be aware of IRS imputed interest rules (Applicable Federal Rate).

What happens if the borrower doesn't pay?

If the borrower defaults, the lender can: (1) demand immediate full payment if an acceleration clause is included; (2) file a lawsuit to obtain a court judgment, then collect through wage garnishment, bank levy, or property liens; (3) exercise rights against any collateral pledged to secure the note; and (4) report the default to credit bureaus if applicable.

Can I charge 0% interest on a promissory note?

Yes, you can create a non-interest-bearing promissory note. However, for loans between related parties (family members), the IRS may impute interest income at the Applicable Federal Rate (AFR) if the loan exceeds $10,000. This means the lender may owe tax on interest they never actually received. Consult a tax advisor for loans within the family.

Is a promissory note valid if the borrower only signs?

Yes — unlike a bilateral contract, a promissory note is a unilateral instrument. Only the borrower (the maker) needs to sign for it to be enforceable. The lender's signature is not legally required, though having the lender sign as acknowledgment is good practice. Both parties should retain copies.

What is an acceleration clause in a promissory note?

An acceleration clause allows the lender to declare the entire remaining loan balance immediately due and payable upon a borrower's default — rather than waiting for each missed payment. This gives the lender powerful leverage in case of default. Without an acceleration clause, the lender can only sue for each individual missed payment as it comes due.

Legal Templates
Promissory Note Template

Free Promissory Note Template — Fill, Download & Sign

Free — No Sign-Up RequiredPDF & WordContent date March 21, 2026

⚠️ Important: This is a general informational template, not legal advice or a guarantee of validity. Requirements vary by state and situation. Verify current official requirements and seek a licensed attorney for consequential matters. Review our sources and methodology.

Document Completeness18%

Governing State*

State whose laws govern this promissory note — determines applicable usury laws

Borrower and lender information

Borrower Full Legal Name*

Full legal name of the person or entity borrowing money

Borrower Address*

Lender Full Legal Name*

Full legal name of the person or entity lending money

Lender Address*

Principal, interest rate, and loan date

Principal Amount*

The total amount being borrowed

Annual Interest Rate (%)*

Enter 0 for an interest-free loan. Check your state's usury laws for maximum rates.

Interest Calculation Method*

Simple Interest (calculated on principal only)Compound Interest (calculated on principal + accrued interest)

Loan Date (Date Funds Disbursed)*

MM/DD/YYYY

Repayment Type*

Installment Payments (regular periodic payments)Lump-Sum (full repayment on a specific date)Demand Note (payable when lender demands repayment)

How the borrower will repay the loan

Installment Payment Amount

Amount due each payment period

Payment Due Date*

When payments are due (day of month for installments, or final due date for lump-sum)

Default provisions, late fees, and collateral

Include Late Fee Provision

Charge a penalty when payments are more than a specified number of days late

Include Acceleration Clause

If borrower defaults, the entire remaining balance becomes immediately due and payable

Secured by Collateral

The borrower pledges specific property as security for repayment of this note

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PROMISSORY NOTE

Date: [Loan Date (Date Funds Disbursed)]

State: [Governing State]

PRINCIPAL AMOUNT: $[Principal Amount]

FOR VALUE RECEIVED, the undersigned Borrower promises to pay to the order of Lender the principal sum set forth above, together with interest thereon, subject to the terms and conditions of this Promissory Note ("Note").

BORROWER INFORMATION

Name: [Borrower Full Legal Name]

Address: [Borrower Address]

LENDER INFORMATION

Name: [Lender Full Legal Name]

Address: [Lender Address]

1. PRINCIPAL AND INTEREST

Borrower promises to pay to Lender the principal amount of $[Principal Amount], together with interest at the annual rate of [Annual Interest Rate (%)]% per annum, calculated on a simple interest basis.

Interest shall be calculated solely on the outstanding principal balance.

2. REPAYMENT TERMS

Borrower shall repay this Note in installments of $[Installment Payment Amount] each, due [Payment Due Date], beginning on the first payment date following disbursement and continuing until the full principal amount and all accrued interest have been paid in full.

All payments shall be made to Lender at the address stated above or to such other address as Lender may designate in writing.

3. APPLICATION OF PAYMENTS

All payments received shall be applied first to any outstanding late fees or costs, then to accrued and unpaid interest, and finally to the reduction of principal.

4. DEFAULT

The following events constitute a default ("Event of Default") under this Note:

(a) Borrower's failure to make any payment when due;

(b) Borrower becomes insolvent or makes an assignment for the benefit of creditors;

Upon the occurrence of an Event of Default, Lender may exercise all rights and remedies available under this Note and applicable law.

PREPAYMENT

Borrower may prepay this Note, in whole or in part, at any time without penalty. All prepayments shall be applied as provided in Section 3 above.

GOVERNING LAW

This Note shall be governed by and construed in accordance with the laws of the State of [Governing State], without regard to conflict of law principles. Borrower consents to jurisdiction and venue in the courts of [Governing State] for any action arising under this Note.

WAIVERS

Borrower waives presentment, demand for payment, protest, and notice of dishonor. No delay or omission on the part of Lender in exercising any right hereunder shall operate as a waiver of such right.

ATTORNEY'S FEES

If this Note is placed in the hands of an attorney for collection, or if suit is brought to collect this Note, Borrower agrees to pay all reasonable attorney's fees and costs of collection incurred by Lender.

SEVERABILITY

If any provision of this Note is held to be invalid or unenforceable, the remaining provisions shall remain in full force and effect.

IN WITNESS WHEREOF, the Borrower has executed this Promissory Note as of the date first written above.

_________________________________

[Borrower Full Legal Name]

Borrower Signature

Printed Name: [Borrower Full Legal Name]

Date: _______________

_________________________________

[Lender Full Legal Name]

Lender Signature (Acknowledgment)

Printed Name: [Lender Full Legal Name]

Date: _______________

Document Completeness18%

Governing State*

State whose laws govern this promissory note — determines applicable usury laws

Borrower and lender information

Borrower Full Legal Name*

Full legal name of the person or entity borrowing money

Borrower Address*

Lender Full Legal Name*

Full legal name of the person or entity lending money

Lender Address*

Principal, interest rate, and loan date

Principal Amount*

The total amount being borrowed

Annual Interest Rate (%)*

Enter 0 for an interest-free loan. Check your state's usury laws for maximum rates.

Interest Calculation Method*

Simple Interest (calculated on principal only)Compound Interest (calculated on principal + accrued interest)

Loan Date (Date Funds Disbursed)*

MM/DD/YYYY

Repayment Type*

Installment Payments (regular periodic payments)Lump-Sum (full repayment on a specific date)Demand Note (payable when lender demands repayment)

How the borrower will repay the loan

Installment Payment Amount

Amount due each payment period

Payment Due Date*

When payments are due (day of month for installments, or final due date for lump-sum)

Default provisions, late fees, and collateral

Include Late Fee Provision

Charge a penalty when payments are more than a specified number of days late

Include Acceleration Clause

If borrower defaults, the entire remaining balance becomes immediately due and payable

Secured by Collateral

The borrower pledges specific property as security for repayment of this note

What Is a Promissory Note Template?

A promissory note is a written financial instrument in which one party (the borrower) unconditionally promises to pay a specific sum of money to another party (the lender) at a defined time or on demand. Promissory notes are binding legal documents that establish the terms of a loan — including the principal amount, interest rate, repayment schedule, and consequences of default. This template supports simple interest, compound interest, installment repayment, lump-sum repayment, and demand notes, with optional clauses for late fees, acceleration, and collateral..

When Do You Need It?

You need a promissory note any time you lend or borrow money and want a legally enforceable written record. Common situations include: personal loans between friends or family, business loans from private investors, seller financing in real estate transactions, deferred payment arrangements for goods or services, and student loans from private parties. Even informal loans benefit from a promissory note to avoid disputes over repayment terms..

What's Included in This Template

Principal loan amount and disbursement date
Interest rate with choice of simple or compound calculation
Repayment type: installments, lump-sum, or demand
Conditional installment payment schedule
Default clause defining events of default
Optional: Late fee provision
Optional: Acceleration clause (full balance due on default)
Optional: Collateral/security pledge
Governing law and state jurisdiction
Signature lines for borrower and lender

How to Fill It Out

Enter Party Information — Provide the full legal names and addresses of both the borrower and the lender. These names must match the signatures at the bottom of the document.

Set Loan Terms — Enter the principal amount (the amount being borrowed), the annual interest rate, and select whether interest is calculated as simple or compound. Enter 0 for an interest-free loan.

Choose Repayment Type — Select how the loan will be repaid: installment payments (monthly or other intervals), a lump-sum payment on a specific date, or on demand (payable whenever the lender requests). If you select installments, enter the payment amount and due date each period.

Add Optional Clauses — Enable the late fee clause to charge a penalty on overdue payments, the acceleration clause to make the full balance due upon default, and the collateral clause if the loan is secured by property.

Review and Sign — Both the borrower and lender must sign and date the completed promissory note. Consider having signatures notarized or witnessed for additional legal protection, especially for large loan amounts.

Legal Requirements & Notes

Promissory notes are regulated at both the state and federal level. Key legal considerations: - **Usury Laws**: Every state sets a maximum allowable interest rate (usury limit) for private loans. Exceeding this rate may render the interest provision void or unenforceable, or in some states, the entire note. Research your state's usury laws before setting the interest rate. For example, California limits consumer loans under $2,500 to 30% APR. - **Simple vs. Compound Interest**: Simple interest is calculated only on principal; compound interest accrues on principal plus unpaid interest. Compound interest results in higher total repayment and may be subject to stricter scrutiny in some states. - **Negotiable Instrument**: A promissory note may qualify as a negotiable instrument under Article 3 of the Uniform Commercial Code (UCC), which governs its transferability and enforcement. To qualify, the note must be an unconditional promise to pay a fixed amount at a definite time. - **Collateral and UCC Filings**: If the note is secured by personal property, the lender should file a UCC-1 Financing Statement with the appropriate state authority to perfect the security interest and establish priority over other creditors. - **Real Estate Security**: If the note is secured by real property, a separate mortgage or deed of trust should be executed and recorded with the county recorder's office. - **Tax Implications**: The IRS requires that certain loans between related parties (family members) charge at least the Applicable Federal Rate (AFR) to avoid gift tax implications. For below-AFR loans, the IRS may impute interest income.

Frequently Asked Questions

A promissory note is a simpler document in which the borrower unconditionally promises to repay a sum of money. A loan agreement (also called a credit agreement) is a more comprehensive bilateral contract that may include additional provisions such as representations and warranties, financial covenants, and detailed default remedies. For personal or informal loans, a promissory note is usually sufficient. For larger commercial loans, a full loan agreement may be preferable.

Free Promissory Note Template — Fill, Download & Sign

PROMISSORY NOTE

BORROWER INFORMATION

LENDER INFORMATION

1. PRINCIPAL AND INTEREST

2. REPAYMENT TERMS

3. APPLICATION OF PAYMENTS

4. DEFAULT

PREPAYMENT

GOVERNING LAW

WAIVERS

ATTORNEY'S FEES

SEVERABILITY

What Is a Promissory Note Template?

When Do You Need It?

What's Included in This Template

How to Fill It Out

Legal Requirements & Notes

Frequently Asked Questions

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