Finance & Operations

Free Promissory Note Template (PDF)

A promissory note is a written, signed promise by a borrower to repay a specific amount of money to a lender, with or without interest, on a set date or in installments. It's the simplest way to put a personal or small-business loan in writing.

When to use it

Use a promissory note whenever you lend money to a friend, family member, employee, or another business and want a clear record of what's owed and when. Only the borrower signs it, since it's the borrower's promise. If the loan needs more detailed terms for both sides, such as the lender's obligations, use a loan agreement instead.

What's typically included

• Principal amount, date, and both parties
• Promise to pay
• Interest rate, or an interest-free option
• Lump-sum or monthly installment repayment
• Where and how payments are made
• Prepayment with no penalty
• Optional late charge
• Default, written notice, and acceleration
• Collection costs where the law allows
• Unsecured or secured by collateral
• Waivers and governing law
• Payoff confirmation
• Signature block for the borrower

How to fill it in

• Check your state's usury limit before setting an interest rate. Most states cap the rate on personal loans, and charging more can make the interest uncollectable.
• Choose either a single due date or an installment schedule, and delete the option you don't use.
• If the loan is secured by a car or other property, describe it and sign a separate security agreement. If it's secured by real estate, you need a mortgage or deed of trust, which usually has to be notarized and recorded.
• Send the note to the borrower to sign and keep the signed copy. When the loan is repaid, give the borrower written confirmation that it's paid in full.

This template is a general starting point, not legal advice — customize it and have it reviewed for your situation.

Frequently asked questions

Is an electronically signed promissory note valid?

Yes, as a binding promise between the borrower and lender. The U.S. ESIGN Act and state UETA laws make an e-signature as valid as ink for this. The exception is a note you plan to sell or transfer as a negotiable instrument, or a note secured by real estate: those have special rules, so lenders usually handle them through a dedicated process.

What's the difference between a promissory note and a loan agreement?

A promissory note is a one-sided promise signed by the borrower. A loan agreement is a two-sided contract signed by both parties and usually covers more, like the lender's obligations and conditions. For a simple personal loan, a note is usually enough.

Does a promissory note need to be notarized?

Generally no. A promissory note is enforceable without notarization in most situations. Notarization is mainly needed for related documents, such as a mortgage or deed of trust when the loan is secured by real estate.

Can I charge interest to a friend or family member?

Yes, within your state's usury limit. For larger loans, also be aware that the IRS can treat an interest-free or very low-interest loan as partly a gift. Ask a tax professional if the amount is significant.