Interactive template
Free legal form · Promissory Note
Promissory Note.
Customize a Promissory Note: principal, interest, repayment schedule, default terms.
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This is a template, not legal advice. Templates work for many situations. Complex matters or jurisdiction-specific issues warrant attorney review.
Find an attorney →When to use
Right for these situations.
When to use
Friend or family member is lendingBoth want clear terms.
When to use
Founder is lending to the companyMember loan.
When to use
A vendor is financing a purchaseDocumentation required.
When to use
Bridge debt before next equity roundPending fundraise.
Common mistakes
What to avoid.
Mistake
No written documentationVerbal loans hard to enforce.
Mistake
Below AFR interestIRS may impute interest for related-party loans.
Mistake
No maturity dateIndefinite obligations may not be enforceable.
Mistake
Vague default termsDefine events of default.
FAQ
Common questions.
What is AFR?
Applicable Federal Rate. Minimum rate for related-party loans.
Notarize?
Generally not required.
Promissory vs convertible note?
Promissory: pure debt. Convertible: converts to equity.
Tax treatment?
Interest expense deductible to borrower; income taxable to lender.
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