Promissory Note (IOU) Template
Free promissory note (IOU) template. Set out the loan amount, interest, repayment schedule, and default terms in plain English, then sign and date it.
A promissory note is a written promise from one person or business (the borrower) to repay a sum of money to another (the lender) on agreed terms. It records the amount borrowed (the principal), any interest, how and when repayment happens, and what counts as default. People often call a simple version an IOU, but a proper promissory note spells out the details so both sides know exactly what was agreed.
Use a promissory note any time real money changes hands and a handshake is not enough. That includes a personal loan to family or a friend, a short-term advance between business partners, seller financing on a sale, or a director lending money to their own company. Putting the terms in writing turns a vague favor into a clear obligation and gives the lender something to point to if repayment slips.
This template works for both a single lump-sum repayment and a schedule of installments, with optional interest. Fill in the bracketed placeholders, delete any clauses you do not need, and have the borrower sign and date it. An electronically signed note backed by a tamper-evident audit trail is generally valid under the ESIGN Act and UETA in the US and under eIDAS in the EU, as long as both parties intend to be bound and agree to sign electronically. Note that a promissory note is a negotiable instrument, so if you need to transfer or sell the note later, special rules apply to electronic originals; for a larger or transferable loan it is worth getting legal advice.
When to use it
- Lending money to family, a friend, or a business contact and you want clear repayment terms
- Offering seller financing or an installment plan on a sale
- Recording a loan between a company and its owner, director, or a related party
- Converting an informal IOU into a documented obligation with interest and a due date
- Setting out what happens on missed payments before any money goes out
Learn more
Template FAQ
An IOU simply acknowledges that a debt exists. A promissory note goes further: it is a formal promise to pay that sets out the principal, any interest, the repayment schedule, and what happens on default. Because it is more complete, a promissory note is usually easier to rely on if there is ever a dispute.
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