Besides banks, you can search for financial support for your business to another source such as another company or a person. Once this party has decided to lend you some funds, they will use the small business promissory note which contains details that should have been paid attention. Some certain terms and conditions differ from this document from another.
From this page, you can learn from the promissory note example for free. And if you are a person who will lend the money to the borrower, you can use the promissory note template for free too. It is editable and customizable.
Guides In Creating A Small Business Promissory Note
Below is a shortlist of how to create a small business promissory note properly and how to make it legally binding so your fund can be protected.
- Download the right template – The first thing to do before drafting is downloading the right template. The right one will help you know what component should be written so it has the power in front of the court.
- Fill in the basic details – Next is filling the basic details on the draft, from the company logo and everything related to the loan such as loan ID, the address of the borrower, borrower’s ID and so on.
- Reason for payment – A loan document should be written clearly. You need to state clearly the amount of money that has been paid. Besides, the person who signs the promissory note also needs to be written too. All details including the interest rate have to be stated clearly. This is purposed to eliminate the errors.
- Payment Method – Another thing to write is the payment method. You need to state how the person should pay the debt. Details such as the date, months and the year of the payment should be stated too. Make sure the borrower also knows when the last date of payment is. If you manage to include charge, you have to state it clear whether it should be paid with the primary fund or separately.
The calculation of the late payment should be measurable and clear. Show how the calculation is done and mention what happens if the person fails to pay the date in a certain period. The borrower should be made aware of certain rules. If the borrower fails to make payment based on the rules you have mentioned, state the borrower should bear the consequences. Write down what needs to be done.
- Classes – The clauses and conditions are the two most important things in the business. Because this promissory note is different from the regular one, you have to be aware of it. List down everything that the borrower needs to pay attention to. Think about possible disputes or problems in the future due to the failure of fulfilling the responsibilities. Besides, you also need to write down the solution to how this problem will be resolved.
- Signature – The last thing to pay attention to is the signature. Place the signature space of both parties that the borrower and lender agree with all terms and conditions and agree to fulfill the obligation. If the borrower fails to fulfill the obligation, there is a consequence should be faced.
Don’t forget to download our small business promissory note templates. It can be edited and customized for free! You can also add or remove additional items if you want to.
Sample Small Business Promissory Notes Template