Is a promissory note the same as a loan agreement?

They do the same job. A promissory note is the borrower's promise to pay; a loan agreement is usually longer and has obligations for both sides. For a simple personal or small business loan, a note is often enough.

How much interest can I charge?

States set maximum interest rates (usury limits), and loans between family members at very low rates can have tax consequences. The template reduces the rate to the legal maximum if it is set too high; check your state's limits.

Can a promissory note be signed electronically?

Yes, for most notes. Notes that must be negotiable instruments under UCC Article 3, such as some secured real estate notes, may need a paper original. Ask a lawyer if you plan to sell or pledge the note.

Free template

Promissory note template

A promissory note is a borrower's written promise to repay a loan on set terms. It works as a simple loan agreement between friends, family or businesses: the amount, the interest, the repayment schedule and what happens if payments stop. Edit it in the browser and send it for signature from the same page; the free plan includes 5 sends a month and never asks for a card.

Start free with this template

When to use it

Lending money to a friend, relative or employee and wanting it in writing.
A founder lending money to their own company.
Seller financing, where the buyer pays part of the price over time.

What's in it

1.Interest
2.Repayment
3.Payments
4.Prepayment
5.Late payment
6.Default
7.Security
8.General

Plus signature, name and date fields for borrower and lender.

The full template

The text you start from, exactly as it opens in the editor. Bracketed blanks are yours to fill in; highlighted fields are filled by each signer.

Promissory Note

Principal amount: $[amount]. Date: Date signed — Borrower

For value received, [Borrower name], of [Borrower address] (the “Borrower”), promises to pay [Lender name], of [Lender address] (the “Lender”), the principal amount above, with interest, on the terms of this note.

1. Interest

Interest accrues on the unpaid principal at [rate]% per year, simple interest, from the date of this note until paid in full. If that rate exceeds the maximum allowed by law, the rate is reduced to the maximum allowed.

2. Repayment

The Borrower will repay the loan [in [number] equal monthly installments of $[amount], due on the [day] of each month starting [date] / in one payment of all principal and interest on [maturity date]]. All remaining amounts are due no later than [maturity date].

3. Payments

Payments are made to the Lender by [bank transfer / check / other] at the address or account the Lender designates in writing, and are applied first to any late fees, then to interest, then to principal.

4. Prepayment

The Borrower may prepay all or part of the loan at any time without penalty. Partial prepayments do not postpone later installments unless the Lender agrees in writing.

5. Late payment

If a payment is more than [ten (10)] days late, the Borrower will pay a late fee of $[amount], or the maximum allowed by law if less.

6. Default

The Borrower is in default if a payment is more than [thirty (30)] days late, or if the Borrower becomes insolvent or files for bankruptcy. On default the Lender may, by written notice, declare the whole unpaid balance due immediately, and the Borrower will pay the Lender's reasonable costs of collection, including attorneys' fees, as the law allows.

7. Security

This note is [unsecured / secured by [describe collateral] under a separate security agreement dated [date]].

8. General

The Lender's delay in enforcing any right is not a waiver of it. This note is governed by the laws of the State of [State], may be changed only in writing signed by both parties, and binds the Borrower's successors. The Lender may assign it with notice to the Borrower.

Signatures

Borrower

Signature: Signature — Borrower

Name: Full name — Borrower

Date: Date signed — Borrower

Lender

Signature: Signature — Lender

Name: Full name — Lender

Date: Date signed — Lender

This template is a general-purpose starting point written in plain English for use in the United States. It is not legal advice and has not been reviewed for your situation; for anything high-stakes, have a lawyer review the final version.

How to send it for signature

Step 1
Start from the template
It opens as a document in the editor with both parties' signature, name and date fields already placed. Fill in the bracketed blanks and change any clause.
Step 2
Add who signs
Put an email address on each party, set the signing order if it matters, add an access code if you want one, and add a viewer for anyone who only needs to read it.
Step 3
Send it and track it
Each signer gets a link and signs in the browser, no account needed. You see who has opened and signed, and everyone gets the completed PDF with a certificate of completion.