Writing a promissory note borrower
Payments can be made weekly, monthly, or yearly. State if the interest rate is a fixed or variable rate. Interest only payment and final balloon payment: You make regular payments of interest only over a number of months or years.
Whichever you choose depends on the terms you wish to include and your personal situation. Each borrower should print and sign his name, as well as date the promissory note, to acknowledge the obligation to repay the loan. There are emotional pitfalls to loans between family and friends, along with financial risks and administrative requirements, says Asheesh Advani, author of Business Loans from Family and Friends: How to Ask.
The rights and remedies of the Payee shall be cumulative and may be pursued singly, successively, or together, in the sole discretion of the Payee.
Add the amount of the loan, written in numeric value and long form written out in wordssimilar to how you would write a check. The lender is the person or company lending a sum of money to the borrower.
Simple promissory note sample
Tips If there is more than one borrower, make sure each borrower prints, signs and dates the promissory note. Collateral As part of your Promissory Note, there may be an option to include collateral or security. What happens if the money is not paid back? That should also dictate how much interest is assessed, suggests Freeman. Write out a description saying how the borrower is to repay the loan, such as with weekly, monthly or quarterly payments. Advani says that too often, small business owners fail to follow the basic but important lending guidelines when they borrow from an individual. All payments under this Note shall be applied first to accrued but unpaid interest, and next to outstanding principal. Each state regulates whether notes are transferable so be sure to consult your local laws and include the precise language needed i. Collection After the terms are signed, the borrower is expected to make payments regularly according to the agreement. All parties to this Note including Maker and any sureties, endorsers, and guarantors hereby waive protest, presentment, notice of dishonor, and notice of acceleration of maturity and agree to continue to remain bound for the payment of principal, interest and all other sums due under this Note notwithstanding any change or changes by way of release, surrender, exchange, modification or substitution of any security for this Note or by way of any extension or extensions of time for the payment of principal and interest; and all such parties waive all and every kind of notice of such change or changes and agree that the same may be made without notice or consent of any of them. No delay or omission on part of the holder of this Note in exercising any right hereunder shall operate as a waiver of any such right or of any other right of such holder, nor shall any delay, omission or waiveron any one occasion be deemed a bar to or waiver of the same or any other right on any future occasion.
You just have a financial obligation to pay your debt. Fortunately, the IRS required AFR interest rates are often below commercial mortgage rates, and all the interest and principal payments stay within the family.
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