Sample Unsecured Promissory Note

April 14, 2006

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The attached file contains a sample unsecured promissory note that can be customized to document a loan to you from a family member, friend, or other private party. The form is designed to help prove that you have established a formal debtor/creditor relationship and that the exchange of money is a loan, not a gift. Executing a promissory note and adhering to its terms will help reduce the risks from gift tax issues, conflicts of interest and mismanagement claims, and personal misunderstandings between insiders and entrepreneurs.

Keep in mind that this form is a starting point, not a finished product. You'll want to customize it to make sure that the agreement reflects the understanding between your business and the lender.

File Description:
The file contains a two-page document in rich text format (RTF) that is suitable for use with most word processing programs used in the Windows environment.

Download:
Unsecured promissory note

Special Features:

The concise sample promissory note covers:

proper identification of the parties
basic repayment terms — interest, payment dates, place of payment, etc.
optional default and confession of judgment provisions
repayment ledger

As with all contracts and legal documents, it's a good idea to consult a local lawyer or the laws of your state regarding limitations or requirements affecting promissory notes (most notably the default and confession of judgment options).

More information:
Insider Financing