# Promissory note template

Source: https://contracko.com/de/vertragsvorlagen/promissory-note

# Promissory note template

A legally binding financial instrument where a borrower promises to repay a specific loan amount to a lender. Defines principal amount, interest rate, payment schedule, maturity date, late fees, prepayment terms, default consequences, and collateral provisions for secured or unsecured loans.

## Promissory Note

## Promissory Note

This Promissory Note (the "Note") is executed on 2023-10-01 (the "Effective Date").

### 1. Parties

Borrower: Name: John Doe Address: 123 Borrower Ln City, State, ZIP: City, State, 12345 SSN/EIN: 000-00-0000

Lender: Name: Jane Smith Address: 456 Lender Rd City, State, ZIP: City, State, 67890 SSN/EIN: 000-00-0000

### 2. Promise to Pay

FOR VALUE RECEIVED, Borrower promises to pay to the order of Lender, the principal sum of $10000 (Ten Thousand dollars), together with interest as set forth below.

Principal Amount: $10000

Loan Purpose: business expansion (business expansion, personal loan, debt consolidation, real estate, equipment purchase, etc.)

Loan Type: unsecured (secured / unsecured / demand note / installment note)

### 3. Interest

Interest Rate: 5% per annum (simple interest: simple interest / compounded annually)

Interest Calculation Method:

- Interest calculated on interest basis (actual/360 / actual/365 / 30/360)
- Interest accrues from interest start date
- interest calculation details

Interest Accrual: Interest accrues on the outstanding principal balance

Fixed or Variable: rate type (fixed / variable based on variable index + margin%)

Interest Rate Adjustments (if variable): Rate adjusted adjustment frequency based on rate index

Maximum Rate (if applicable): Not to exceed maximum rate% (usury cap: usury limit)

### 4. Payment Terms

Payment Structure: payment structure (choose one)

#### Option A: Installment Payments

Payment Amount: payment amount per payment frequency (monthly / quarterly / annual)

Number of Payments: total payments

First Payment Date: first payment date

Subsequent Payments Due: payment schedule (e.g., 1st of each month)

Final Payment Date: final payment date (maturity date)

Payment Application: Payments applied first to accrued interest, then to principal

Amortization: amortization type (fully amortized / interest-only with balloon / custom schedule)

Payment Schedule: See attached Amortization Schedule (Exhibit A): schedule attached

#### Option B: Balloon Payment

Interest-Only Payments: interest payment amount due interest payment frequency

Balloon Payment: Entire principal balance of principal amount plus any accrued interest due on balloon date

#### Option C: Lump Sum Payment

Single Payment: Entire principal plus accrued interest due on maturity date

#### Option D: Demand Note

Payment Due: Upon demand by Lender, but no later than demand notice days days after written demand

Minimum Notice: Lender must provide minimum demand notice days written notice before payment due

### 5. Payment Method and Address

Payment Method: payment method (check, wire transfer, ACH, cash, online payment, etc.)

Payment Address/Instructions:

payment instructions

Late Delivery: Payments sent by mail deemed made when postmarked

### 6. Prepayment

Prepayment Allowed: prepayment permitted (yes, at any time without penalty / yes, with penalty / not permitted)

Prepayment Penalty: prepayment penalty (none / penalty percentage% of prepaid amount / penalty amount if prepaid before penalty cutoff date)

Partial Prepayment: partial prepayment (allowed / not allowed)

Prepayment Application: Applied to principal, reducing total interest owed

Prepayment Notice: Borrower must provide prepayment notice days days written notice: prepayment notice required

### 7. Late Payments and Default

Grace Period: grace period days days from due date

Late Fee: late fee (e.g., late fee amount or late fee percentage% of overdue amount) assessed if payment not received within grace period

Late Fee Cap: Not to exceed late fee maximum or max late fee percent% of payment

Default Interest Rate: Upon default, interest rate increases to default interest rate% per annum (not to exceed legal maximum)

Events of Default:

Borrower shall be in default if:

a) Failure to make any payment within default days days of due date

b) Breach of any covenant or agreement in this Note or related agreements

c) Borrower files bankruptcy, becomes insolvent, or makes assignment for benefit of creditors

d) Any representation made by Borrower is false or misleading

e) additional default events

f) (If secured) Loss, theft, substantial damage, sale, or encumbrance of collateral without Lender consent

### 8. Acceleration Clause

Acceleration Upon Default: Upon default, Lender may declare entire unpaid principal balance, plus accrued interest and fees, immediately due and payable

Notice of Acceleration: Lender must provide acceleration notice days days written notice before acceleration (unless prohibited by law)

Cure Period: Borrower has cure period days days from default notice to cure default

### 9. Security and Collateral (if secured)

Security Status: security status (unsecured / secured)

Collateral Description (if secured):

collateral description

Collateral Address/Location: collateral location

Collateral Value: Estimated at collateral value

Security Agreement: This Note secured by separate Security Agreement dated security agreement date (attached as Exhibit B)

UCC Filing: Lender authorized to file UCC-1 Financing Statement

Collateral Insurance: Borrower must maintain insurance: insurance requirements

Collateral Maintenance: Borrower must maintain collateral in good condition and protect against loss

Priority: lien priority (first lien / second lien / subordinate to senior creditor)

Rights Upon Default: Upon default, Lender may take possession of collateral and sell according to applicable law (UCC Article 9)

### 10. Guarantors (if applicable)

Guarantor: guarantor required

If required:

Guarantor Name: guarantor name

Guarantor Address: guarantor address

Guarantee Type: guarantee type (unconditional / limited to guarantee limit / conditional)

Personal Guarantee: Guarantor personally guarantees payment of this Note and waives notice of default

Joint and Several Liability: Guarantor jointly and severally liable with Borrower

### 11. Remedies and Collection Costs

Lender's Remedies: Upon default, Lender may pursue any remedy available at law or in equity, including:

- Demand immediate payment of entire balance
- Report default to credit bureaus
- Pursue collection through third-party agencies
- Initiate legal action
- (If secured) Repossess and sell collateral

Collection Costs: Borrower responsible for all costs of collection, including:

- Reasonable attorney fees
- Court costs and filing fees
- Collection agency fees (up to collection fee cap%)
- Repossession and sale costs

Attorney Fees: attorney fee provision (prevailing party / Lender only)

### 12. Waivers and Consents

Borrower Waives:

- Presentment for payment
- Notice of dishonor
- Protest
- Notice of protest
- Notice of default (except as required by law)
- Demand for payment (except for demand notes)

Extension or Modification: Lender may extend time for payment or modify terms without notice to guarantors or co-signers

No Waiver by Delay: Lender's delay in exercising rights doesn't waive those rights

### 13. Representations and Warranties

Borrower Represents:

- Borrower has full legal capacity to enter this Note
- Execution doesn't violate any other agreement
- All information provided to Lender is accurate
- (If business) Borrower is duly organized and in good standing
- additional representations

### 14. Covenants

Affirmative Covenants (Borrower must):

- Maintain existence and good standing (if business)
- Maintain adequate insurance: required insurance
- Pay all taxes when due
- Provide financial statements: financial reporting requirement
- Notify Lender of material adverse changes
- additional affirmative covenants

Negative Covenants (Borrower must not):

- Incur additional debt exceeding additional debt limit without Lender consent
- Sell or encumber collateral (if secured)
- Make distributions exceeding distribution limit (if business)
- Merge or consolidate without consent
- additional negative covenants

### 15. Transferability

Assignment by Lender: Lender may sell, assign, or transfer this Note without Borrower consent

Borrower Obligations Continue: Borrower's obligations continue regardless of assignment

Delegation by Borrower: Borrower may not delegate or transfer obligations without Lender's written consent

### 16. Notices

Notice Requirements: All notices must be in writing and delivered by:

- Personal delivery
- Certified mail, return receipt requested
- Overnight courier
- Email (if confirmed): email notice permitted

Notice Addresses: To addresses stated above, or as updated in writing

Effective Date: Notices effective upon receipt (or deemed receipt days days after mailing)

### 17. Governing Law and Jurisdiction

Governing Law: This Note governed by laws of governing state (without regard to conflicts of law)

Jurisdiction: Exclusive jurisdiction in courts of jurisdiction county County, governing state

Venue: Venue proper in venue location

Waiver of Jury Trial: jury waiver (Parties waive right to jury trial / jury trial preserved)

### 18. Usury Savings Clause

If any provision would result in interest rate exceeding maximum lawful rate, interest rate automatically reduced to maximum lawful rate. Any excess interest paid shall be applied to principal or refunded.

### 19. Severability

If any provision held invalid or unenforceable, remaining provisions remain in full force and effect.

### 20. Entire Agreement

This Note, together with any security agreements and guarantees, constitutes entire agreement between parties and supersedes all prior understandings.

### 21. Amendments

No amendment or modification valid unless in writing and signed by both Borrower and Lender.

### 22. Binding Effect

This Note binds and benefits parties and their respective heirs, executors, administrators, successors, and permitted assigns.

### 23. Countersignature and Execution

This Note may be executed in counterparts, each deemed an original. Electronic signatures have same effect as original signatures.

### 24. Additional Terms

additional terms

### 25. Acknowledgment

Borrower acknowledges:

- Receipt of copy of this Note
- Understanding of all terms
- Opportunity to consult legal and financial advisors
- Obligation to repay loan according to terms

### 26. Exhibits

Exhibit A: Amortization Schedule - exhibit a attached

Exhibit B: Security Agreement - exhibit b attached (if secured)

Exhibit C: Personal Guarantee - exhibit c attached (if applicable)

### BORROWER SIGNATURE

BORROWER

Date: 2023-10-01

Name: John Doe

Signature: _____________________________

LENDER

Date: 2023-10-01

Name: Jane Smith

Signature: _____________________________

## Vorlage anpassen

Execution Date

Interest Start Date

Schedule Attached

Balloon Date

Maturity Date

Penalty Cutoff Date

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## Häufig gestellte Fragen

- **Q:** Is a Promissory Note the same as a loan agreement?
  **A:** A Promissory Note is generally simpler and focuses on the borrower's promise to pay, whereas a loan agreement is more comprehensive and includes obligations for both parties.

- **Q:** Does a Promissory Note need to be notarized?
  **A:** Notarization is not legally required in most cases, but it adds an extra layer of authentication and can help prevent disputes about the signature's validity.

- **Q:** What happens if the borrower defaults on a Promissory Note?
  **A:** The lender can pursue legal action to collect the debt, including filing a lawsuit, obtaining a judgment, and potentially seizing collateral if the note is secured. Late fees and penalties may also apply.

- **Q:** Can a Promissory Note be transferred to another party?
  **A:** Yes, promissory notes are negotiable instruments that can be sold or transferred. The original lender (payee) can endorse the note to a new holder who then has the right to collect payment from the borrower.

- **Q:** What interest rate is legal to charge on a promissory note?
  **A:** Permissible interest rates vary significantly by jurisdiction. Most US states have usury laws capping the maximum interest a private lender can charge, typically ranging from 6% to 24% per year on personal loans, though commercial loans often enjoy higher or no caps. Charging above the legal limit can make the interest — or in some states the entire note — unenforceable. Always check the usury rules in the governing jurisdiction before setting the rate.

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