Promissory Note (IOU) — PDF Template

A promissory note is a one-way written promise from the borrower to the lender to repay a defined sum. A loan agreement is a two-way contract with reciprocal obligations (lender promises to fund, borrower promises to repay, both promise covenants). For loans under ~$50K between individuals or with a friendly lender, a promissory note is enough. For institutional or syndicated loans, you’ll typically have both: a loan agreement plus a promissory note that evidences the debt.

Secured = backed by collateral (a car, a house, equipment, business assets) that the lender can seize on default. Unsecured = the lender has only the borrower’s personal promise plus litigation as recourse. Use secured for amounts above ~$10K, for borrowers with no credit history, or any time you want priority over other creditors in bankruptcy. Use unsecured for small amounts between trusted parties (family loans, founder bridge loans).

It depends on state usury law and loan purpose, and getting it wrong renders the note void or capped at the legal rate (sometimes with treble damages or principal forfeiture). Sample of the 50-state matrix our wizard enforces: California Civil Code §1916-1 — 10% maximum on consumer loans for personal/family/household use; commercial loans by licensed lenders under California Financial Code §22000 et seq. are exempt (Strike v. Trans-West Discount Corp., 92 Cal.App.3d 735). New York General Obligations Law §5-501 — 16% civil cap, 25% criminal usury under NY Penal Law §190.40, void ab initio per Adar Bays LLC v. GeneSYS ID, Inc., 37 N.Y.3d 320 (2021) — the lender forfeits both principal and interest. Texas Finance Code Ch. 302 — 10% default, 18% with proper disclosure, 28% on commercial loans by licensed lenders, treble damages and contract cancellation under §305.001 for a knowing violation. Florida Stat. §687.03 — 18% under $500K, 25% above, criminal usury at 45% under §687.071. Massachusetts G.L. c.107 §3 / c.271 §49 — 6% legal default, 20% criminal usury without prior Attorney General notification. Pennsylvania 41 Pa. C.S. §201 — 6% on loans under $50K. Arkansas Const. Amend. 89 — hard cap of 17% on ALL loans, no exceptions (Bayview Loan Servicing v. Rentas, 2024 Ark. 12). Many states (DE, SD, UT, NV) have NO cap on written commercial loans — explaining why credit-card issuers domicile there. The wizard checks your stated rate against the state, loan purpose, and lender type, and refuses to render the PDF if the note would be void. None of the SERP incumbents do this — eForms publishes a static usury chart but does not block usurious entry, LegalZoom's $35 template ships with a generic "interest rate ___%" blank with zero state validation, PandaDoc $19/mo prints whatever you type.

Only for consumer-purpose loans (personal, family or household use) above $25,000 (or any loan secured by a dwelling, regardless of amount). TILA (15 USC § 1601) and Regulation Z require disclosure of APR, finance charge, amount financed, total of payments, and payment schedule before consummation. Business-purpose loans, agricultural loans, and consumer loans under $25K (other than dwelling-secured) are exempt. The wizard asks the loan purpose and applies TILA only when triggered.

Notarization is not legally required for a promissory note to be enforceable, but it is highly recommended for amounts above $10,000 — it makes the note self-authenticating in court (the lender doesn’t need to call the borrower as a witness to prove the signature). For notes secured by real estate, acknowledgment by a notary is typically required to record the deed of trust. Remote Online Notarization (RON) is now valid in 44 states.

The default and acceleration clause governs. Default usually triggers on missed payment (after a cure period of 10-30 days), bankruptcy, or breach of any covenant. With an acceleration clause, the entire unpaid balance becomes immediately due. The lender can then sue for the full amount plus accrued interest and reasonable attorneys’ fees (if the fee-shifting clause is in). For secured notes, the lender can also foreclose on or repossess the collateral following the UCC Article 9 procedure.

Yes — the wizard offers an optional personal-guaranty addendum, useful when the borrower is a corporate entity (LLC, corporation) and you want a principal’s personal recourse. Common for small-business loans, founder bridge loans, and family-and-friends rounds. The guarantor signs separately, often with a notarized signature.

Yes — preview, edit and download the PDF for free. The free plan covers any note — output carries a watermark, 0 AI Deep Detect, no page limit (notes run 2-5 pages with the amortization schedule). Start at $8.99/mo unlocks 8 AI Deep Detect/mo, advanced clauses (security agreements, personal guaranty), audit-trail e-signature and RON integration.

Yes — Frankfurt (EU) hosting, AES-256 at rest, files deleted within 24h after download. GDPR-compliant, SOC 2 controls, and we never use your loan data to train third-party AI models.