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Promissory Note Template (Free, Fill-in-the-Blank)

A promissory note is a written, signed promise by one party (the borrower, or maker) to pay a set amount of money to another (the lender, or payee) on stated terms. Below: what a note must say, a free fill-in-the-blank sample you can copy into Word, the difference between secured and unsecured notes and between demand and installment notes, the mistakes that cause disputes, and how to draft or review a note in Word with LexDraft.

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Last checked: 22 October 2026. This page is general information about United States practice, not legal advice. Promissory notes are governed by state law, which varies. Check your state's law, or ask a lawyer licensed there, before you rely on any note.

What a promissory note is

A promissory note records a debt and the borrower's promise to repay it. It is usually shorter than a full loan agreement: it states who owes whom, how much, at what interest rate, and when and how payments are due. Common uses: personal loans between friends or family, loans from an owner to their company, seller financing, and private real estate loans (paired with a mortgage or deed of trust).

In most states, the Uniform Commercial Code (UCC) Article 3 governs notes that qualify as negotiable instruments. Under UCC section 3-104, that broadly means an unconditional promise to pay a fixed amount of money, payable to the lender's order or to bearer, on demand or at a definite time, with no other undertaking beyond limited exceptions. Many simple personal notes are not negotiable, and that is fine: they can still be enforced as contracts.

Promissory note vs loan agreement

A loan agreement is the fuller contract: conditions to funding, borrower representations, covenants, defaults and remedies. A note is the borrower's payment promise. Small private loans often use a note alone; larger or business loans usually use both, so make sure the amount, rate and default terms match. For the larger case, see our commercial loan agreement review checklist.

Key clauses in a promissory note

Parties. Full legal names and addresses of the borrower and lender. For a company, use its exact registered name and an authorized signer. Name any co-signer or guarantor.
Principal. The amount borrowed, in words and figures, and the date the funds were advanced.
Interest. The annual rate, whether it is simple or compound, and when interest starts to accrue. State usury laws cap the rate that may be charged on some loans; the limits, exemptions and penalties vary widely by state and by loan type. Check your state's current rule before you set a rate.
Payment schedule. A lump sum on a maturity date, regular installments (amount, due day and number of payments), or payment on demand. Say where payments go and how each is applied.
Prepayment. Whether the borrower may pay early, in whole or in part, and whether any prepayment fee applies.
Late fee. A grace period and a late charge. Keep the charge reasonable; some states regulate late fees, especially on consumer and real estate loans.
Default and acceleration. What counts as default (a missed payment after any grace or cure period, insolvency) and the lender's right to declare the whole unpaid balance due at once.
Security or collateral. For a secured note, a description of the collateral and a reference to the separate security agreement, mortgage or deed of trust that grants the lender its interest.
Governing law. The state whose law applies.
Collection costs and waivers. Whether the borrower pays reasonable collection costs and attorney fees, and any permitted waivers of presentment, notice of dishonor and protest. Preserve any agreed written-demand procedure, notice and cure periods, and protections that applicable law does not allow the borrower to waive.
Signatures. The borrower must sign; having the lender sign too shows agreement to the terms. Electronic signatures can support enforceable loan contracts, but an electronic negotiable note raises separate requirements. E-SIGN's general signature rule excludes most UCC matters, including Article 3. State transferable-record rules, and E-SIGN for qualifying real-estate loans, may require the issuer's express agreement and a system that reliably establishes control of the electronic record. Get advice on the signing and storage method before using an electronic note.
Notarization and witnesses. Generally not required for a promissory note to be valid. Requirements differ by state and by document, though: a mortgage or deed of trust that secures the note usually has to be notarized before it can be recorded.

Secured vs unsecured, demand vs installment

Two choices shape every note: whether it is backed by collateral, and when the money is due.

Type	What it means	Typical use	Watch out for
Unsecured note	The lender relies only on the borrower's promise. If the borrower does not pay, the lender must sue and then collect the judgment.	Small personal or family loans.	No priority over other creditors if the borrower becomes insolvent.
Secured note	Backed by collateral, such as a vehicle, equipment, inventory or real estate. The lender can enforce against the collateral on default.	Seller financing, business loans, private real estate loans.	The note alone usually does not create the security interest. Use a signed security agreement (UCC Article 9 for personal property) or a mortgage or deed of trust. Then perfect it: often a UCC-1 filing for personal property, the certificate of title for most vehicles, recording for real estate.
Demand note	Payable whenever the lender asks. Under UCC section 3-108, a note that states no time for payment is generally treated as payable on demand.	Informal loans to family or to your own company.	The borrower gets no fixed schedule. Add a minimum notice period before payment is due on demand.
Installment note	Repaid in regular payments (for example, monthly) of principal and interest over a set term.	Personal loans, seller financing, equipment purchases.	Attach an amortization schedule and include an acceleration clause.
Lump-sum (balloon) note	Principal (and sometimes all interest) is due in one payment on a maturity date, possibly after smaller interim payments.	Short bridge loans.	Plan how the borrower will repay or refinance the balloon payment.

Free promissory note template (sample text)

Copy the text below into Word and fill in the brackets. It is an original, general US sample of an installment note with optional secured and demand wording. It is a starting point, not a finished document. Review it against your state's law, including usury and consumer-lending rules, and have a lawyer review it for any significant loan.

PROMISSORY NOTE

Principal amount: $[__________] Date: [__________] City and state where signed: [__________]

1. Promise to pay. For value received, [BORROWER FULL LEGAL NAME], of [address] ("Borrower"), promises to pay to the order of [LENDER FULL LEGAL NAME], of [address] ("Lender"), the principal sum of [amount in words] U.S. dollars ($[amount in figures]), together with interest as stated below.

2. Interest. Interest accrues on the unpaid principal from [date] at a fixed rate of [___]% per year, calculated as simple interest on the basis of a [365]-day year. In no event will the interest charged exceed the maximum rate permitted by applicable law; any amount paid above that rate will be applied to principal or refunded to Borrower.

3. Payments. [Choose one and delete the others.] (a) Installments: Borrower will pay [number] consecutive monthly payments of $[amount], beginning on [date] and continuing on the [day] day of each month, with the entire unpaid balance and accrued interest due on [maturity date]. (b) Lump sum: Borrower will pay all principal and accrued interest on [maturity date]. (c) On demand: Borrower will pay all principal and accrued interest within [30] days after Lender delivers a written demand for payment.

4. Place and application of payments. Payments will be made in U.S. dollars to Lender at [address or account details], or as Lender directs in writing. Except for principal prepayments under section 5, payments will be applied first to accrued interest, then to principal, and then to lawful unpaid late charges, subject to any different allocation required by applicable law. A payment that otherwise fully satisfies the current installment and is made on time will not be treated as late or in default solely because an earlier late charge remains unpaid. No late charge will be imposed on another late charge.

5. Prepayment. Borrower may prepay this Note in whole or in part at any time without penalty. Partial prepayments are applied to principal and do not postpone later scheduled payments.

6. Late charge. If any payment is more than [___] days late, Borrower will pay a late charge of $[amount] [or [___]% of the overdue payment], to the extent permitted by applicable law.

7. Default. Borrower is in default if (a) Borrower fails to make any payment within [___] days after its due date; (b) Borrower becomes insolvent, makes an assignment for the benefit of creditors, or is the subject of a bankruptcy proceeding; or (c) [any other event of default].

8. Acceleration. Subject to applicable law, if a default under section 7 remains uncured after Lender gives Borrower written notice and [___] days to cure where a cure is possible, Lender may declare the entire unpaid principal and accrued interest immediately due. This section does not authorize acceleration, collection, or enforcement in violation of a bankruptcy stay, discharge injunction, or other applicable restriction. After acceleration, interest will accrue at [___]% per year, not to exceed the maximum rate permitted by law.

9. Security. [Optional; delete if the Note is unsecured.] This Note is secured by [describe collateral] under a [Security Agreement / Mortgage / Deed of Trust] dated [date] between Borrower and Lender. [If unsecured: This Note is unsecured.]

10. Collection costs. If Lender refers this Note for collection after default, Borrower will pay Lender's reasonable collection costs, including reasonable attorney fees, to the extent permitted by law.

11. Waivers. To the extent permitted by applicable law, Borrower waives presentment, notice of dishonor and protest. This waiver does not waive the written demand and payment period in section 3(c), if selected, the notice and cure period in section 8, or any notice or other protection that applicable law does not permit Borrower to waive. Lender's delay or failure to exercise any right does not waive that right.

12. Governing law; changes. This Note is governed by the laws of the State of [state]. If any provision is unenforceable, the rest remains in effect. Any change must be in writing and signed by Borrower and Lender.

BORROWER: ______________________________ Printed name: [__________] Date: [______]

[If Borrower is an entity: By: ____________________ Name/Title: [__________]]

[If another person will be liable: have counsel add the appropriate co-borrower or guaranty terms and signature block, and any required cosigner notice. This sample does not define that person's obligations.]

LENDER (acknowledging the terms): ______________________________ Printed name: [__________] Date: [______]

Not legal advice. This sample is not tailored to any state or transaction. Check your state's law on interest rates, late fees, consumer lending and collection, and on how security interests must be granted and perfected.

Common mistakes in promissory notes

Setting a rate without checking usury law. Charging above a state's limit can cost the lender some or all of the interest, and in some states more. Limits and exemptions differ for personal, business and real estate loans.
Ignoring tax rules on family loans. An interest-free or below-market loan can have federal tax consequences under Internal Revenue Code section 7872. The IRS publishes Applicable Federal Rates each month. Ask a tax adviser before you lend to a relative at little or no interest.
Leaving the due date vague. "Repay when you can" invites a dispute. State a schedule, a maturity date, or a clear demand procedure with notice.
Calling a note "secured" without a security document. Writing "secured by my car" in the note is rarely enough on its own. Use an appropriate security agreement, mortgage or deed of trust, complete the required perfection steps, and check for existing liens. Perfection helps protect priority, but earlier interests and special priority rules can still put another creditor ahead of you.
No acceleration clause. Without one, a lender may only be able to recover installments as they fall due.
Wrong or missing parties. A note signed by an individual when the borrower is a company (or the reverse) invites arguments about who owes the debt.
Conflicting documents. If a loan agreement, note and security agreement disagree on the amount, rate or default terms, the borrower will argue for the most favorable reading.
No payment records. Keep bank records of every payment. When the note is paid off, give a written release and mark the original "paid".
Lending to consumers as a business without checking the rules. If you make loans regularly, federal disclosure rules (the Truth in Lending Act) and state lender licensing laws may apply. A one-page note does not satisfy them.

How to draft or review a promissory note in Word with LexDraft

LexDraft is a Word add-in from Microsoft AppSource. It opens as a side panel in Word 365 (Windows and Mac), Word 2021 and Word on the web, so the note stays in the document you are already editing.

Describe the note

Open LexDraft in Word and describe the loan in plain English: the parties, the amount, the rate, the repayment structure and the governing state. LexDraft asks a few clarifying questions, then writes a first draft into your document as editable Word text.

Review it against the governing law

To review a note you drafted, or one the other side sent, pick the governing state and run a review. LexDraft has four built-in playbooks (NDA, SaaS MSA, DPA and services agreement) and no dedicated promissory note playbook, so this runs as a general review. Findings are graded Critical, High, Medium or Low, and LexDraft flags standard terms that are missing.

Check and accept the redlines

Run the defined-term and cross-reference checks, which are rule-based and run without AI. Accept or reject each proposed redline; accepted changes land as native Word tracked changes. Nothing changes in your document until you accept a redline.

What LexDraft does not do: it does not give legal, tax or financial advice, calculate interest or amortization schedules, or confirm your state's usury limit. You check every output before anyone signs.

Frequently Asked Questions About Promissory Notes

Is a promissory note legally binding?

Generally, yes. A signed note recording a loan and the borrower's promise to repay is usually enforceable. A court may still refuse to enforce unlawful terms, such as interest above the state's usury limit.

Does a promissory note need to be notarized?

Generally, no. Notarization is not usually required for a promissory note to be valid. Requirements differ by state and document, though: a mortgage or deed of trust that secures the note usually must be notarized before it can be recorded.

What is the difference between a promissory note and a loan agreement?

A promissory note is the borrower's written promise to repay: amount, interest, schedule and default terms. A loan agreement is a fuller contract that adds conditions, representations, covenants and remedies. Larger loans often use both.

What is the difference between a secured and an unsecured promissory note?

An unsecured note relies only on the borrower's promise. A secured note is backed by collateral that the lender can enforce against on default. The collateral is granted in a separate security agreement, mortgage or deed of trust, which the lender usually perfects by filing or recording.

What is the difference between a demand note and an installment note?

A demand note is payable whenever the lender asks; under UCC section 3-108, a note that states no time for payment is generally treated as payable on demand. An installment note is repaid in regular scheduled payments over a set term.

How much interest can I charge on a personal loan?

It depends on your state. State usury laws cap interest on some loans, with limits and exemptions that vary by state and loan type. For low- or no-interest family loans, federal below-market loan rules (Internal Revenue Code section 7872) may also matter.

What happens if the borrower does not pay?

Subject to applicable law, follow the note's notice and cure provisions before accelerating or pursuing collection. A bankruptcy filing can stop collection, lawsuits and enforcement against collateral; get legal advice before acting if bankruptcy is involved. Outside those restrictions, the lender may sue or pursue available collateral remedies. Deadlines to sue vary by state and by the type of note. For ordinary negotiable notes, the uniform text of UCC section 3-118 generally provides six years from the stated due date or dates, or an accelerated due date, for a note payable at a definite time, and six years after demand for a demand note. Without a demand, a demand-note claim is barred after ten continuous years with no principal or interest payment. Check the applicable state's law promptly; nonnegotiable notes can follow different rules.

Can I write my own promissory note?

Yes. Many personal notes are written by the parties from a template like this one. Fill in every bracket, delete options that do not apply and keep the signed original. For a large loan, a loan secured by real estate, or regular lending, have a lawyer licensed in your state review it.

Reviewing a loan document someone else drafted?

Draft and review promissory notes in Word

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This page is general information, not legal advice. LexDraft does not give legal advice; review every draft with qualified counsel licensed in the relevant state. Spotted something out of date? Email support@lexdraft.ai and we will fix it.