Promissory Note Template California

INSTITUTIONAL PROMISSORY NOTE

Document ID: PN-CA-2026-V1.0
Effective Date: [Effective Date]
Governing Jurisdiction: State of California

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1. STATUTORY & LEGAL COMPLIANCE NOTICE

THIS IS A LEGALLY BINDING INSTRUMENT. THIS PROMISSORY NOTE TEMPLATE IS DESIGNED TO COMPLY WITH THE APPLICABLE PROVISIONS OF THE CALIFORNIA CIVIL CODE, THE CALIFORNIA UNIFORM COMMERCIAL CODE (UCC), AND CALIFORNIA USURY LAWS. HOWEVER, FINANCIAL INSTRUMENTS INVOLVING SIGNIFICANT PRINCIPAL AMOUNTS, VARIABLE INTEREST RATES, OR COMPLEX COLLATERAL ARRANGEMENTS CARRY INTRICATE LEGAL AND TAX RAMIFICATIONS. PARTIES ARE STRONGLY ADVISED TO RETAIN INDEPENDENT QUALIFIED LEGAL COUNSEL AND LICENSED FINANCIAL ADVISORS TO REVIEW THIS DOCUMENT PRIOR TO EXECUTION. THE DRAFTER AND PUBLISHER OF THIS DOCUMENT DISCLAIM ALL LIABILITY FOR ANY DIRECT, INDIRECT, OR CONSEQUENTIAL LOSSES ARISING FROM THE IMPROPER USE, MODIFICATION, OR UNREPRESENTED EXECUTION OF THIS TEMPLATE.

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2. PARTIES & RECITALS

MAKER (Borrower):
[Borrower Full Legal Name], having a principal place of residence or registered address at [Borrower Principal Address] ("Maker").

HOLDER (Lender):
[Lender Full Legal Name], having a principal place of residence or registered address at [Lender Principal Address] ("Holder").

RECITALS:
A. Maker has requested that Holder advance funds to Maker in the aggregate principal amount of [Amount in USD] United States Dollars ([Written Dollar Amount]), subject to the terms and conditions set forth herein.
B. Holder is willing to extend such credit to Maker upon the terms and conditions hereinafter set forth.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Maker unconditionally promises to pay to the order of Holder the principal sum, together with interest accrued thereon, pursuant to the terms of this Promissory Note (this "Note").

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3. EXHAUSTIVE OPERATIVE CLAUSES & LEGAL TERMS

1. Principal Amount and Interest Rate

1.1 Principal Sum. For value received, Maker promises to pay to the order of Holder the principal sum of [Amount in USD] ([Written Dollar Amount]), together with interest thereon calculated in accordance with the terms of this Note. 1.2 Interest Rate. The unpaid principal balance of this Note shall bear interest at the rate of [Interest Rate Percentage]% per annum, calculated on the basis of a 365-day year and the actual number of days elapsed, or the maximum rate permitted by applicable California law, whichever is less. 1.3 Usury Savings Clause. It is the intention of Maker and Holder to comply strictly with the usury laws of the State of California. In no event shall the effective rate of interest contracted for, charged, or received under this Note exceed the maximum rate permissible under applicable law. If any interest is collected in excess of the maximum legal rate, such excess amount shall be applied automatically to the reduction of the principal balance of this Note or, if the principal has been paid in full, refunded directly to Maker.

2. Repayment Terms and Schedule

2.1 Maturity Date. The entire outstanding principal balance of this Note, together with all accrued and unpaid interest and any other charges or fees provided for herein, shall be due and payable in full on [Maturity Date] (the "Maturity Date"), unless accelerated earlier pursuant to the terms of this Note. 2.2 Installment Payments. Maker shall repay the principal and interest of this Note in installments as follows:

• Payment Amount: [Installment Amount in USD]
• Payment Frequency: [Monthly / Quarterly / Annually]
• First Payment Due Date: [First Payment Date]
• Subsequent Payments Due: The [Day of Month] day of each successive [Month / Quarter], continuing until the Maturity Date. 2.3 Application of Payments. All payments made on this Note shall be applied first to the payment of any late fees, collection costs, or other charges due hereunder, second to accrued and unpaid interest, and third to the reduction of the principal balance. 2.4 Method of Payment. All payments of principal and interest shall be made in lawful money of the United States of America in immediately available funds by wire transfer, automatic clearing house (ACH) transfer, or check delivered to Holder at Holder’s address set forth above, or to such other place or account as Holder may designate in writing to Maker from time to time.

3. Prepayment Privileges

3.1 Right to Prepay. Maker shall have the right to prepay the principal amount of this Note, in whole or in part, at any time and from time to time, without premium or penalty. 3.2 Application of Prepayments. Any partial prepayment shall be applied against the principal installments last maturing and shall not postpone the due date of any subsequent scheduled installment payments, unless Holder otherwise agrees in writing.

4. Default, Late Charges, and Default Interest

4.1 Late Charges. If any scheduled payment is not received by Holder within [Number] calendar days after the date it is due, Maker shall pay to Holder a late charge equal to [Late Fee Percentage]% of the overdue payment, or [Late Fee Flat Amount in USD], whichever is greater, to defray administrative expenses associated with collection. 4.2 Default Interest. Upon the occurrence and during the continuation of an Event of Default (as defined herein), the outstanding principal balance of this Note shall bear interest at the lesser of (a) the maximum rate permitted by California law, or (b) eighteen percent (18%) per annum (the "Default Rate"), calculated from the date of default until the default is cured or this Note is paid in full.

5. Events of Default

The occurrence of any one or more of the following events shall constitute an "Event of Default" under this Note: 5.1 Failure to Pay. Maker fails to pay any installment of principal or interest within [Number] days of the date when due; 5.2 Breach of Covenants. Maker fails to perform, observe, or comply with any other covenant, agreement, or condition contained in this Note and such failure continues for a period of [Number] days after written notice thereof from Holder; 5.3 Insolvency and Bankruptcy. Maker files a petition in bankruptcy, is adjudicated bankrupt or insolvent, makes an assignment for the benefit of creditors, seeks appointment of a receiver, trustee, or liquidator for all or a substantial part of its assets, or if any such petition or application is filed against Maker and is not dismissed within sixty (60) days; 5.4 Judgments and Attachments. Any money judgment, writ of attachment, or similar process is entered or filed against Maker in an amount exceeding [Dollar Threshold Amount] and remains unvacated, unbonded, or unstayed for a period of thirty (30) days; or 5.5 Misrepresentation. Any representation or warranty made by Maker in connection with this Note proves to have been materially false or misleading when made.

6. Acceleration of Maturity

Upon the occurrence of any Event of Default, and at any time thereafter during the continuation of such Event of Default, Holder may, at its sole option, declare the entire unpaid principal balance of this Note, together with all accrued interest and all other sums due hereunder, immediately due and payable without presentment, demand, protest, or further notice of any kind, all of which are hereby expressly waived by Maker.

7. Security and Collateral (Optional / If Applicable)

7.1 Collateral Pledge. To secure the prompt and complete payment and performance of all obligations of Maker under this Note, Maker hereby grants to Holder a security interest in all right, title, and interest of Maker in and to the property described in Exhibit A attached hereto and incorporated herein by this reference (the "Collateral"), pursuant to the provisions of the California Uniform Commercial Code. 7.2 Further Assurances. Maker authorizes Holder to file financing statements (UCC-1) and take any other actions necessary to perfect, protect, and maintain Holder's security interest in the Collateral.

8. Representations and Warranties of Maker

Maker represents and warrants to Holder that: 8.1 Authority. Maker has full legal power, capacity, and authority to execute, deliver, and perform its obligations under this Note. 8.2 Binding Obligation. This Note constitutes a valid and legally binding obligation of Maker, enforceable against Maker in accordance with its terms. 8.3 No Conflict. The execution and delivery of this Note do not violate any provision of any law, regulation, order, or contractual obligation applicable to Maker.

9. Miscellaneous Provisions

9.1 Waiver of Presentment and Notice. Maker and all endorsers, sureties, and guarantors of this Note hereby severally waive presentment for payment, demand, notice of dishonor, protest, notice of protest, and all other notices or demands in connection with the delivery, acceptance, performance, default, or enforcement of this Note. 9.2 Costs of Collection and Enforcement. If this Note is placed in the hands of an attorney for collection, or if suit is instituted to enforce payment of this Note, or if this Note is collected through bankruptcy, probate, or other judicial proceedings, Maker promises to pay all reasonable costs and expenses incurred by Holder, including, without limitation, reasonable attorneys' fees and court costs. 9.3 Amendments and Waivers. No modification, amendment, waiver, or discharge of any provision of this Note shall be valid unless executed in writing by both Maker and Holder. No failure or delay by Holder in exercising any right, power, or privilege hereunder shall operate as a waiver thereof. 9.4 Severability. If any provision of this Note is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, such provision shall be modified to the minimum extent necessary to make it valid and enforceable, and the remaining provisions shall remain in full force and effect. 9.5 Entire Agreement. This Note constitutes the entire agreement between Maker and Holder with respect to the subject matter hereof and supersedes all prior oral or written negotiations, commitments, and understandings. 9.6 Assignment. This Note shall be binding upon and inure to the benefit of Maker and Holder and their respective successors and permitted assigns. Maker may not assign its obligations under this Note without the prior written consent of Holder. Holder may assign or transfer this Note, in whole or in part, at any time without notice to Maker. 9.7 Notices. All notices, demands, or other communications required or permitted under this Note shall be in writing and shall be deemed duly given when delivered personally, sent by reputable overnight courier with tracking, or sent by certified mail, return receipt requested, to the addresses set forth above, or to such other address as a party may designate by notice to the other. 9.8 Governing Law and Venue. This Note, and all claims or causes of action (whether in contract, tort, or statute) that may be based upon, arise out of, or relate to this Note, shall be governed by, and enforced in accordance with, the internal laws of the State of California, without regard to its conflict of laws principles. Maker irrevocably and unconditionally submits to the exclusive jurisdiction of the state and federal courts located in [County Name] County, California, for any legal action, suit, or proceeding arising out of or relating to this Note.

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4. EXECUTION & FORMAL SIGNATURE BLOCKS

IN WITNESS WHEREOF, Maker has executed and delivered this Promissory Note as of the Effective Date first written above.

FOR MAKER (BORROWER):

Signature: _____________________________________
Printed Name: [Authorized Signatory Name]
Title: [Title / Role]
Company / Entity: [Borrower Full Legal Name] (if applicable)
Date: [Date]

FOR HOLDER (LENDER):

Signature: _____________________________________
Printed Name: [Authorized Signatory Name]
Title: [Title / Role]
Company / Entity: [Lender Full Legal Name] (if applicable)
Date: [Date]

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5. STEP-BY-STEP EXECUTION & FILING GUIDE

1. Document Preparation: Open this template in a word processor (Microsoft Word or Google Docs). Locate all bracketed fields (e.g., [Borrower Full Legal Name], [Amount in USD], [Maturity Date]) and replace them with the correct transaction data. Ensure no bracketed placeholders remain unedited.
2. Review of Legal & Financial Terms: Verify that the principal amount, interest rate, installment amounts, and maturity date accurately reflect the business agreement between the Maker and the Holder. Confirm that the interest rate does not violate California usury caps applicable to the specific nature of the loan and the parties.
3. Collateral Documentation (If Applicable): If this is a secured promissory note, draft and attach Exhibit A containing a detailed legal description of the collateral assets, and prepare Form UCC-1 for filing with the California Secretary of State.
4. Signatory Authority Verification: Confirm that the individuals signing on behalf of any corporate entity, LLC, or partnership possess the legal capacity and corporate authority to bind the entity pursuant to its organizational documents (e.g., Bylaws, Operating Agreement, Board Resolutions).
5. Digital Execution: Export the finalized document to PDF format. Route the PDF through an institutional-grade digital signature platform (such as DocuSign or Adobe Sign) that maintains an audit trail compliant with the ESIGN Act and California Uniform Electronic Transactions Act (UETA).
6. Record Retention: Store the fully executed original promissory note in a secure, fireproof physical vault or a cryptographically secure digital repository. The Holder must retain possession of the original physical note if negotiability under the California Uniform Commercial Code is required.