Promissory Note Template and How to Draft One (2026)

What is a promissory note, and when do you need one? A promissory note is a written, signed promise by one person (the maker, or borrower) to pay a fixed sum of money to another (the payee, or lender), either on demand or on a set date. It is one of the oldest and simplest debt documents there is. You need one whenever money changes hands as a loan and both sides want a clear record: a loan between friends or family, a shareholder advancing funds to a company, a seller allowing a buyer to pay in instalments, or a short business loan outside a bank. A promissory note is simpler than a full loan agreement. It records the debt and the promise to repay; it does not usually set out covenants, events of default in detail, or lender rights the way a long-form facility agreement does. For small, straightforward loans that simplicity is the point. Below is a promissory note template you can copy and adapt, followed by plain-English guidance on how to fill each part. This is general information, not legal advice. For a large loan, a secured loan, or anything unusual, have a qualified lawyer review your final document. ## Promissory note template ```

PROMISSORY NOTE Principal Amount: [CURRENCY] [AMOUNT] Date: [DATE] Place: [CITY] 1. PROMISE TO PAY For value received, [MAKER LEGAL NAME], [address] ("Maker") unconditionally promises to pay to [PAYEE LEGAL NAME], [address] ("Payee"), or order, the principal sum of [CURRENCY] [AMOUNT IN WORDS AND FIGURES] ("Principal"). 2. INTEREST The Principal carries interest at [RATE]% per annum, calculated [simple / compounding] from [the date of this Note / the date of disbursal] until paid in full. [If interest free, state: This Note is interest free.] 3. REPAYMENT The Maker will repay as follows: [Option A - on demand: on written demand by the Payee.] [Option B - lump sum: in full on [MATURITY DATE].] [Option C - instalments: in [N] equal instalments of [CURRENCY] [AMOUNT] on the [Nth] day of each month, beginning [DATE], until paid in full.] Payments are made to [bank account / method] and applied first to interest, then to Principal. 4. PREPAYMENT The Maker may repay all or part of the Principal early at any time with no penalty. [Adapt if a penalty or notice applies.] 5. DEFAULT If any payment is more than [N] days late, or the Maker becomes insolvent, the Payee may declare the whole outstanding balance immediately due and payable. Overdue amounts carry interest at [DEFAULT RATE]% per annum. 6. SECURITY [Unsecured: This Note is unsecured.] [Secured: This Note is secured by [DESCRIBE COLLATERAL] under a separate security document dated [DATE].] 7. COSTS The Maker will pay the Payee's reasonable costs of recovering any overdue amount, including legal costs permitted by law. 8. GOVERNING LAW This Note is governed by the laws of [JURISDICTION]. The Maker submits to the [courts of [PLACE] / arbitration seated in [PLACE]]. 9. GENERAL This Note binds the Maker's successors and legal representatives. Any waiver by the Payee must be in writing. If any part is unenforceable, the rest remains in force. SIGNED by the Maker: ______________________ Date: __________ [MAKER NAME] Witness: ______________ [name, address]