What this form is for
A promissory note is used when a business borrows money from a bank, private lender, or investor and needs to document the legal obligation to repay. This is the binding contract that spells out the principal amount, interest rate, payment schedule, maturity date, and consequences if you default.
Before you start
- Loan amount (principal) and the exact disbursement date
- Annual interest rate and whether it is fixed or variable
- Repayment terms: monthly payment amount, payment due date each month, and final maturity date
- Collateral description if the note is secured by assets or real property
- Business legal name, address, and EIN; borrower's personal information if personally guaranteeing
Step-by-step
1. Fill in the date the note is being executed and the principal loan amount in both numerals and written-out words to prevent disputes.
2. Enter the borrower's full legal name and address. If your business entity is borrowing, use the exact registered business name. If you are signing personally, your individual name goes here.
3. Specify the lender's full legal name and address exactly as it appears on their corporate documents or identification.
4. State the annual interest rate as a percentage. In Florida, there is no strict usury cap for business loans, but rates above 18 percent for consumer loans may trigger scrutiny, so confirm your loan classification.
5. Detail the repayment schedule: monthly payment amount, day of the month due (for example, the first or fifteenth), and the final maturity date when the entire remaining balance is due.
6. Indicate if the note is secured or unsecured. If secured, attach a separate security agreement and describe the collateral on the note itself.
7. Include prepayment terms. State whether you can pay off the loan early without penalty, which is favorable for borrowers seeking flexibility.
8. Fill in the late fee provision and default interest rate that applies if you miss payments. Florida law allows reasonable late fees, typically 4-5 percent of the overdue payment.
9. Add governing law and venue clauses specifying that Florida law applies and which county handles disputes.
10. Sign and date in the presence of a notary public if required by your lender. Keep the original or a certified copy for your business records.
What lenders look for
- Banks verify that the interest rate and terms match the commitment letter and that payment amounts are calculated correctly, so double-check your math before submission.
- Underwriters flag missing maturity dates, vague collateral descriptions, and any alterations or cross-outs, which suggest sloppiness or potential fraud.
- Personal guarantees are standard for small-business loans; expect to sign individually even if your LLC is the borrower, and make sure your personal information is current and matches your credit report.