What this form is for
A promissory note is used when a small business borrows money and needs to document the legal promise to repay. Both the lender and borrower sign this binding contract that specifies the principal amount, interest rate, payment schedule, and what happens if the borrower defaults.
Before you start
- Loan amount (principal) and the exact interest rate you have agreed upon
- Payment schedule details: monthly payment amount, due date each month, and final maturity date
- Complete legal names and addresses for both borrower and lender (individual or business entity)
- Collateral description if the loan is secured by specific business assets or property
- Your business federal tax ID number or Social Security number
Step-by-step
1. Fill in the date the note is being executed and the city and state (Georgia) where you are signing.
2. Enter the borrower's full legal name and address. If borrowing as a business entity, use the exact registered business name, not a DBA.
3. Write the principal loan amount in both numbers and words to prevent disputes.
4. Specify the annual interest rate as a percentage. Georgia law allows commercial rates by agreement, but review if your rate triggers any usury concerns for personal guarantees.
5. Detail the payment terms: payment amount, frequency (monthly, quarterly), due date (such as the 1st of each month), and the final maturity date when the full balance is due.
6. If the loan is secured, describe the collateral clearly with serial numbers, addresses, or other identifying details.
7. Complete the default and acceleration clause section, specifying how many days late triggers default (commonly 10-15 days) and whether the lender can demand immediate full payment.
8. Include any prepayment terms—whether you can pay off the loan early without penalty.
9. Add any Georgia-specific provisions your lender requires, such as venue for legal disputes (which county) and whether Georgia's commercial code governs.
10. Both borrower and lender must sign and date. If the borrower is a business, the authorized officer signs and includes their title. Consider notarization for enforceability, though Georgia does not require it for promissory notes.
What lenders look for
- Banks expect the payment schedule to match your cash flow projections exactly. Mismatched numbers raise red flags about your financial planning and can stall approval.
- Missing collateral descriptions or vague default terms make the note unenforceable. Be specific: "2018 Ford Transit VIN 1FTBW2CM4JKA00000" not "delivery van."
- Personal guarantee language matters. If you are guaranteeing a business loan personally, the lender will check that Georgia's homestead exemption and collection laws are addressed properly.