How to Write a Simple Promissory Note

PROMISSORY NOTE (SECURED/UNSECURED)

Document ID: PN-2024-001
Effective Date: [Effective Date]
Version: 1.0
Governing Jurisdiction: [State/Country]

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LEGAL DISCLAIMER

This document is provided for informational and template purposes only and does not constitute formal legal advice. Promissory notes are subject to specific state or regional laws regarding usury limits, interest rate caps, and enforceability requirements. You are strongly advised to consult with licensed legal counsel in your governing jurisdiction to ensure compliance with local statutes and to verify the enforceability of interest and acceleration clauses.

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1. PARTIES

This Promissory Note ("Note") is entered into by and between:

Borrower: [Borrower Full Legal Name], with a principal address at [Borrower Address] ("Borrower").

Lender: [Lender Full Legal Name], with a principal address at [Lender Address] ("Lender").

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2. PRINCIPAL SUM AND INTEREST

2.1 Principal Amount. For value received, the Borrower promises to pay to the order of the Lender the principal sum of [Amount in USD] ($0.00) (the "Principal").

2.2 Interest Rate. The Principal balance remaining unpaid from time to time shall bear interest at the rate of [Interest Rate]% per annum, calculated on the basis of a 365-day year, until paid in full.

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3. REPAYMENT TERMS

3.1 Payment Schedule. The Borrower shall pay the total Principal plus accrued interest in [Number of Payments] consecutive [Monthly/Weekly/Quarterly] installments of $[Amount] beginning on [Date of First Payment], and continuing on the same day of each subsequent period until [Final Maturity Date], at which time all remaining unpaid Principal and interest shall be due in full.

3.2 Prepayment. The Borrower reserves the right to prepay the outstanding Principal balance, in whole or in part, at any time without penalty. Any prepayment shall first be applied to accrued interest, then to the Principal balance.

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4. DEFAULT AND ACCELERATION

4.1 Event of Default. An "Event of Default" shall occur if (a) Borrower fails to make any payment when due and such failure continues for [Number] days after written notice from Lender; or (b) Borrower files for bankruptcy or becomes insolvent.

4.2 Acceleration. Upon the occurrence of an Event of Default, the Lender may, at its option, declare the entire unpaid Principal balance and all accrued interest immediately due and payable without further notice or demand.

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5. COLLECTION COSTS

If this Note is placed in the hands of an attorney for collection, or if it is collected through any legal proceeding, the Borrower agrees to pay all reasonable attorneys' fees, court costs, and collection expenses incurred by the Lender, to the extent permitted by law.

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6. WAIVERS

Borrower waives presentment for payment, notice of dishonor, protest, and notice of protest. No failure or delay by Lender in exercising any right under this Note shall operate as a waiver of such right.

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7. GOVERNING LAW AND JURISDICTION

This Note shall be governed by and construed in accordance with the laws of the State of [State]. Any disputes arising hereunder shall be subject to the exclusive jurisdiction of the courts located in [County], [State].

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8. ENTIRE AGREEMENT

This Note constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior discussions, representations, or agreements. This Note may only be amended by a written instrument signed by both parties.

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9. EXECUTION

FOR BORROWER: Signature: _____________________________________ Printed Name: [Signatory Name] Title: [Title / Role] Date: [Date]

FOR LENDER: Signature: _____________________________________ Printed Name: [Signatory Name] Title: [Title / Role] Date: [Date]

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STEP-BY-STEP EXECUTION & FILING GUIDE

1. Information Completion: Open the template in Microsoft Word or Google Docs. Use the "Find and Replace" function (Ctrl+H) to locate all bracketed items (e.g., [Borrower Full Legal Name]) and input the correct data.
2. Reviewing Usury Laws: Before finalizing, verify the maximum allowable interest rate in the governing jurisdiction. Setting an interest rate above the statutory cap may render the Note unenforceable.
3. Signatory Authority: Ensure the individual signing for a corporate entity possesses the legal authority (e.g., Board Resolution or Operating Agreement) to bind the entity to debt obligations.
4. Digital Signature: Utilize a platform compliant with the ESIGN Act and eIDAS (e.g., DocuSign, Adobe Sign, or HelloSign). Ensure you enable "Audit Trail" or "Certificate of Completion" features to track the signer's identity and IP address.
5. Record Retention:
   • Originals: Store the fully executed digital PDF or physical hard copy in a secure, encrypted cloud repository or fireproof safe.
   • Ledger: Maintain a simple payment ledger tracking each date, amount paid, and the remaining principal balance to prevent accounting disputes.
   • Statute of Limitations: Retain this document for at least the duration of the state’s statute of limitations for contract enforcement (typically 3–10 years depending on the jurisdiction) following the maturity date.