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PROMISSORY NOTE (SIMPLE – UCC COMPLIANT)


I. DOCUMENT HEADER

Date: [EFFECTIVE DATE]

Borrower: [BORROWER LEGAL NAME], a [STATE OF ORGANIZATION] [ENTITY TYPE], with its principal place of business at [ADDRESS] (“Borrower”).

Lender: [LENDER LEGAL NAME], a [STATE OF ORGANIZATION] [ENTITY TYPE], with its principal place of business at [ADDRESS] (“Lender”).

Recitals
A. Borrower has requested that Lender extend credit in the principal amount of [PRINCIPAL AMOUNT] United States Dollars (“USD”).
B. Lender is willing to make such loan on the terms set forth in this Promissory Note (this “Note”).
C. This Note is intended to constitute a negotiable instrument under U.C.C. § 3-104 and shall be construed accordingly.

NOW, THEREFORE, for good and valuable consideration, the parties agree as follows:


II. DEFINITIONS

For purposes of this Note, terms shall have the meanings set forth below. Capitalized terms used but not defined herein have the meanings assigned in the Uniform Commercial Code as adopted in the Governing Law State.

“Business Day” – Any day other than a Saturday, Sunday, or legal holiday in the State of [GOVERNING LAW STATE] on which commercial banks are open for business.
“Event of Default” – Any event specified in Section VI.
“Interest Rate” – [__]% per annum, calculated on the basis of a 360-day year for the actual number of days elapsed, unless otherwise required by applicable law.
“Maturity Date” – [DATE ON WHICH ALL OUTSTANDING PRINCIPAL AND INTEREST ARE DUE AND PAYABLE].
“Note Documents” – Collectively, this Note, any security agreement, guaranty, or other document executed in connection herewith.
“Outstanding Amount” – The unpaid principal balance of this Note together with all accrued and unpaid interest, fees, costs, and expenses payable hereunder.


III. OPERATIVE PROVISIONS

3.1 Promise to Pay. Borrower unconditionally promises to pay to the order of Lender the Principal Amount, together with accrued interest thereon, in lawful money of the United States, in accordance with the payment terms herein.

3.2 Interest. Interest shall accrue on the Outstanding Amount at the Interest Rate from the date hereof until paid in full. Upon the occurrence and during the continuance of an Event of Default, the Interest Rate shall increase by [DEFAULT RATE INCREASE, e.g., 4%] (“Default Rate”).

3.3 Payment Terms.
(a) Scheduled Payments. Borrower shall make [monthly/quarterly/annual] payments of [PAYMENT AMOUNT] commencing on [FIRST PAYMENT DATE] and continuing on each Payment Date thereafter until the Maturity Date, at which time the Outstanding Amount shall be due and payable in full.
(b) Method of Payment. Payments shall be made by ACH debit or wire transfer to an account designated in writing by Lender, in immediately available funds, without set-off or deduction.
(c) Application of Payments. Unless otherwise directed by Lender, payments shall be applied first to accrued interest, then to fees and expenses, and finally to principal.

3.4 Prepayment. Borrower may prepay all or any portion of the Outstanding Amount at any time without premium or penalty; provided, that any partial prepayment shall be accompanied by all accrued interest on the principal prepaid.

3.5 Conditions Precedent. Lender’s obligation to fund is conditioned upon (i) execution and delivery of this Note and all ancillary documents, (ii) delivery of corporate authority documents of Borrower, and (iii) absence of any Event of Default.

[// GUIDANCE: Insert any collateral or guaranty requirements here if the note is to be secured.]


IV. REPRESENTATIONS & WARRANTIES

Borrower represents and warrants to Lender as of the date hereof and on each date funds are advanced:

4.1 Organization & Authority. Borrower is duly organized, validly existing, and in good standing under the laws of its jurisdiction of organization and has full power to execute and deliver the Note Documents.

4.2 Due Authorization; Enforceability. The execution, delivery, and performance of the Note Documents have been duly authorized and constitute the legal, valid, and binding obligation of Borrower, enforceable in accordance with their terms, subject to bankruptcy and equitable principles.

4.3 No Conflicts. The execution and performance of the Note Documents do not violate any organizational documents, material contract, law, or court order applicable to Borrower.

4.4 Solvency. After giving effect to the transactions contemplated hereby, Borrower is solvent and able to pay its debts as they become due.

4.5 Compliance with Laws. Borrower is in compliance in all material respects with all applicable laws and regulations.

The representations and warranties shall survive until the Outstanding Amount is paid in full.


V. COVENANTS & RESTRICTIONS

5.1 Affirmative Covenants. Until payment in full of the Outstanding Amount, Borrower shall:
(a) timely pay all principal, interest, and other amounts due under the Note Documents;
(b) maintain its legal existence and good standing in its jurisdiction of organization;
(c) keep adequate books and records and permit Lender reasonable access thereto upon advance written notice; and
(d) promptly notify Lender of any Event of Default or material adverse change.

5.2 Negative Covenants. Borrower shall not, without Lender’s prior written consent:
(a) incur any indebtedness senior to or pari passu with this Note (other than trade debt incurred in the ordinary course);
(b) merge, consolidate, or sell substantially all of its assets;
(c) create or permit any lien on its assets other than Permitted Liens; or
(d) make any restricted payments or distributions that would impair its ability to pay amounts owing hereunder.


VI. DEFAULT & REMEDIES

6.1 Events of Default. The occurrence of any of the following shall constitute an Event of Default:
(a) Payment Default. Failure to pay any principal, interest, or other amount when due under this Note;
(b) Covenant Default. Failure to perform any covenant set forth in Section V, which continues unremedied for [10] Business Days after written notice;
(c) Misrepresentation. Any representation or warranty proves untrue in any material respect;
(d) Insolvency. Borrower becomes insolvent, admits inability to pay debts, makes a general assignment for the benefit of creditors, or commences any bankruptcy or similar proceeding; or
(e) Cross-Default. Default under any other indebtedness of Borrower in excess of [THRESHOLD AMOUNT].

6.2 Remedies. Upon the occurrence and during the continuance of an Event of Default, Lender may, without notice or demand:
(a) declare the Outstanding Amount immediately due and payable (acceleration);
(b) exercise all rights and remedies available under the U.C.C. or other applicable law;
(c) set off any amounts due against any property or funds of Borrower held by Lender; and
(d) recover all costs of collection, including reasonable attorneys’ fees.

6.3 Cure Periods. Where cure periods are provided, Lender’s rights and remedies shall be suspended only for such cure period.


VII. RISK ALLOCATION

7.1 Indemnification by Borrower. Borrower shall indemnify and hold harmless Lender, its affiliates, and their respective officers, directors, employees, and agents from and against any and all losses, liabilities, and reasonable costs (including attorneys’ fees) arising out of or relating to (i) the enforcement of this Note or (ii) the collection of the Outstanding Amount, except to the extent caused by Lender’s gross negligence or willful misconduct.

7.2 Limitation of Liability. In no event shall either party be liable for any indirect, consequential, punitive, or special damages. Lender’s aggregate liability for any claim arising under this Note shall not exceed the sum of the principal and interest actually received by Lender hereunder.

7.3 Force Majeure. Neither party shall be liable for failure to perform its obligations (other than payment obligations) due to events beyond its reasonable control, including acts of God, war, pandemic, or governmental action, provided such party promptly notifies the other and resumes performance as soon as practicable.


VIII. DISPUTE RESOLUTION

8.1 Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of [GOVERNING LAW STATE], without regard to its conflict-of-laws rules.

8.2 Forum Selection. Borrower irrevocably submits to the exclusive jurisdiction of the state and federal courts located in [COUNTY, STATE] for any action arising out of or relating to this Note.

8.3 Arbitration (Optional).
[ ] Check here if the parties elect binding arbitration. If elected, any dispute shall be resolved by confidential, final, and binding arbitration administered by [ARBITRATION ORGANIZATION] in accordance with its commercial rules. Judgment upon the award may be entered in any court of competent jurisdiction.

8.4 Jury Trial Waiver (Optional).
[ ] JURY WAIVER: IF AND TO THE EXTENT PERMITTED BY LAW, BORROWER AND LENDER HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE.

8.5 Injunctive Relief. Nothing in this Section shall limit Lender’s right to seek provisional or injunctive relief to preserve the status quo or protect collateral, pending resolution of any dispute.


IX. GENERAL PROVISIONS

9.1 Amendments and Waivers. No amendment or waiver of any provision of this Note shall be effective unless in writing and signed by Borrower and Lender.

9.2 Assignment. Borrower may not assign or delegate its obligations without Lender’s prior written consent. Lender may assign this Note in whole or in part, subject to applicable law.

9.3 Successors and Assigns. This Note shall inure to the benefit of and be binding upon the parties and their respective successors and permitted assigns.

9.4 Severability. Any provision of this Note held unenforceable shall be severed, and the remaining provisions shall remain in full force, with the unenforceable provision reformed to the minimum extent necessary to effectuate the parties’ intent.

9.5 Integration. This Note and the other Note Documents constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior agreements, oral or written.

9.6 Counterparts; Electronic Signatures. This Note may be executed in counterparts, each of which is deemed an original and all of which constitute one instrument. Signatures transmitted by electronic means (e.g., PDF, DocuSign) shall be deemed original signatures.

9.7 Notice. All notices shall be in writing and deemed given when delivered personally, sent by nationally recognized overnight courier, or emailed with confirmation, to the addresses first listed above (or such other address as may be designated in writing).


X. EXECUTION BLOCK

IN WITNESS WHEREOF, the parties have executed this Promissory Note effective as of the date first written above.

Borrower:


Name: _____
Title:
_____

[Seal, if applicable]

Lender:


Name: _____
Title:
_____

[Notary Acknowledgment, if required by state law]


[// GUIDANCE:
1. Verify any state-specific requirements for notarization, witness signatures, or maximum lawful interest rates (“usury” laws).
2. If collateral is involved, prepare a separate security agreement and file any required U.C.C. financing statements.
3. Confirm that any elected arbitration or jury waiver complies with the forum state’s enforceability standards.
4. For consumer transactions, additional disclosures (e.g., Truth in Lending Act) may apply; this template is drafted for commercial or business-purpose loans.
5. Adjust cure periods, default rate, and affirmative/negative covenants according to the credit risk profile of the Borrower.
]

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