A promissory note template is a legal document that records a borrower’s promise to pay back a loan. This promise to pay agreement can be used in personal and business transactions, offering financial protection for both parties.
Standard promissory notes are helpful when:
Legal clarity — Clearly defines the loan terms and conditions;
Proof of debt — Protects both lender and borrower in case of disputes;
Flexible repayment options — Allows for custom schedules and terms;
For individuals or businesses engaging in loans, a promissory note sample ensures that both parties understand and acknowledge the financial commitment.
A promissory note template is useful in various financial situations, from personal loans between friends to large corporate transactions. Some of the most common situations include:
When lending money to a friend, family member, or colleague, a promise to pay agreement can help set clear expectations. Without a written agreement, repayment terms may be forgotten, leading to disputes. A properly drafted simple promissory note sample protects both parties and ensures fairness.
Businesses often use a promissory note PDF when borrowing money from investors, banks, or other lenders. These notes serve as a formal recognition of debt while outlining repayment terms.
When purchasing property, buyers may use a promissory note to confirm their loan agreement with the seller or financial institution. A promissory note helps outline financing arrangements, ensuring both sides understand their obligations.
Students receiving private loans often sign a standard promissory note detailing their repayment obligations post-graduation. Forms promissory note clarify loan conditions, interest rates, and repayment start dates.
A promissory note example is frequently used for installment purchases, such as car financing or business equipment. This arrangement allows the buyer to make payments over time while ensuring the seller is protected in case of non-payment.
This section specifies who is borrowing and who is lending the money.
FOR VALUE RECEIVED, Michael Anderson, an individual having their usual place of living at 674 Pine Street, Portland, OR, (the "Borrower") promises to pay Laura Bennett, an individual having their usual place of living at 890 Sunset Drive, Phoenix, AZ, (the "Lender") the principal sum of $5,000 (the "Principal Amount"), together with interest accrued thereon, if any, under the terms and conditions set forth herein.
This section details the financial terms of the loan, including the interest rate.
The loan shall accrue interest at the rate of 5% per year (the "Interest Rate" or the "Accrued Interest"). However, the total interest accrued on the Principal Amount shall not exceed the maximum limit allowed by law, and the Borrower shall not be obligated to pay interest beyond that amount.
The Maturity Date specifies when the loan must be repaid in full, including terms for repayment.
If the Borrower misses a payment, this section outlines the penalty conditions.
The Principal Amount, along with the Accrued Interest, if any, shall be due and payable on June 1, 2025 (the "Maturity Date").
The Principal Amount, along with the Accrued Interest, if any, shall be paid in full on the Maturity Date by cash.
Late Fee: If the Lender does not receive any payment within 10 days from the Maturity Date, the Borrower shall be liable for a late fee of 3% of the overdue payment amount.
Both the Borrower and Lender must sign the loan agreement for it to be legally binding.
Promissory notes don’t have any legal requirements, and some people write them themselves for simple purposes. To get started, you can use our printable promissory note template. To ensure the note contains all essential elements and is compliant with local laws, you should work with a professional document preparer, such as Lawrina.
There are many types of promissory notes, varying in formality and amount. Student loans and personal loans can both be financed with promissory notes, which serve as a legal record of the borrowed amount and protect the lender if the borrower doesn’t make payments.
Although promissory notes are often simple, they should include the names and addresses of the lender and borrower. This legal document should include the amount borrowed, collateral details, payment terms, and signatures of both parties. Your promissory note should also include interest rates and amortization schedules, along with payment amounts and dates. Please contact your local attorney or law firm for assistance in drafting your promissory note.