Promissory Note Sample for Lending Money

PROMISSORY NOTE (SECURED/UNSECURED)

Document ID: PN-[YYYYMMDD]-[001] Effective Date: [Date] Version: 1.0 Governing Jurisdiction: State of [State Name]

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STATUTORY & LEGAL COMPLIANCE NOTICE

THIS DOCUMENT IS A BINDING LEGAL INSTRUMENT. IT IS PROVIDED FOR INFORMATIONAL PURPOSES AND AS A DRAFTING TEMPLATE ONLY. LAWS REGARDING USURY LIMITS, INTEREST RATE CAPS, AND LENDING LICENSURE VARY SIGNIFICANTLY BY JURISDICTION. THE USER IS ADVISED THAT THIS DOCUMENT MAY REQUIRE MODIFICATION TO COMPLY WITH LOCAL STATUTES. CONSULTATION WITH LICENSED LEGAL COUNSEL IS MANDATORY TO ENSURE ENFORCEABILITY AND COMPLIANCE WITH APPLICABLE FINANCIAL REGULATIONS (E.G., TRUTH IN LENDING ACT). THE DRAFTER DISCLAIMS ALL LIABILITY FOR UNAUTHORIZED OR IMPROPER USE OF THIS INSTRUMENT.

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1. PARTIES AND RECITALS

This Promissory Note (the "Note") is entered into as of the Effective Date by and between:

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

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

RECITALS: WHEREAS, Borrower desires to borrow from Lender, and Lender desires to lend to Borrower, the principal sum of [Amount in USD] (the "Principal Amount").

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2. PROMISE TO PAY

For value received, Borrower promises to pay to the order of Lender the Principal Amount, together with interest on the unpaid Principal Amount at the rate of [Interest Rate]% per annum, computed on the basis of a 365-day year.

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3. PAYMENT TERMS

(a) Repayment Schedule: Borrower shall pay the total Principal Amount plus accrued interest in [Number of Payments] consecutive [Monthly/Quarterly/Annual] installments of [Installment Amount], commencing on [Start Date] and continuing until the Maturity Date of [Maturity Date].

(b) Late Payment: Any payment not received within [Number] days of the scheduled due date shall incur a late fee of [Percentage]% of the overdue amount.

(c) Prepayment: Borrower reserves the right to prepay the outstanding Principal Amount, in whole or in part, at any time without penalty.

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4. EVENTS OF DEFAULT

The occurrence of any of the following shall constitute an "Event of Default": (a) Failure to make any payment when due under this Note; (b) The filing of bankruptcy, insolvency, or reorganization proceedings by or against Borrower; (c) The breach of any material representation or warranty contained herein.

Upon an Event of Default, the entire unpaid Principal Amount and all accrued interest shall, at the option of the Lender, become immediately due and payable without notice.

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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, Borrower agrees to pay all reasonable attorneys' fees and court costs incurred by Lender in connection therewith.

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6. WAIVERS

Borrower and all endorsers, sureties, and guarantors of this Note waive presentment for payment, notice of dishonor, protest, and notice of protest.

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7. GOVERNING LAW AND DISPUTE RESOLUTION

(a) Governing Law: This Note shall be governed by and construed in accordance with the laws of the State of [State Name], without regard to its conflict of law principles.

(b) Dispute Resolution: Any dispute arising out of this Note shall be resolved through binding arbitration administered by the American Arbitration Association (AAA) in accordance with its Commercial Arbitration Rules. The seat of arbitration shall be [City, State].

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8. MISCELLANEOUS

(a) Severability: If any provision of this Note is held to be invalid or unenforceable, such provision shall be severed and the remaining provisions shall remain in full force and effect.

(b) Entire Agreement: This Note constitutes the entire agreement between the parties concerning the subject matter hereof and supersedes all prior agreements, oral or written.

(c) Amendments: No modification or amendment to this Note shall be effective unless in writing and signed by both parties.

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9. EXECUTION

FOR LENDER: Signature: _____________________________________ Printed Name: [Authorized Signatory Name] Title: [Title / Role] Company: [Lender Legal Name] Date: [Date]

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

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STEP-BY-STEP EXECUTION & FILING GUIDE

1. Document Customization: Open this document in a word processor. Use the "Find and Replace" function to populate all bracketed fields (e.g., [Amount in USD]).
2. Verification of Authority: If the Borrower or Lender is an entity (LLC, Corp), ensure the signee possesses corporate authority (via a Board Resolution or Operating Agreement) to bind the entity to debt.
3. Interest Rate Compliance: Verify that your chosen interest rate does not exceed the "usury limit" set by the state governing the contract.
4. Digital Execution: Upload the finalized PDF to a compliant e-signature platform (DocuSign, Adobe Sign, or HelloSign). Ensure the "Audit Trail" feature is enabled to capture the IP address and timestamp of both signers.
5. Notarization: While not strictly required for a simple promissory note, consider having the document notarized if the Principal Amount is significant, as this provides a self-authenticating record of the signatures.
6. Record Retention: Store the executed Note in a secure, digital repository (e.g., encrypted cloud storage) and provide a copy to the counterparty immediately upon execution.