Secured Promissory Note Template for Singapore

A secured promissory note is a legal document that formalises a loan agreement between a lender and borrower in Singapore, with specific assets pledged as collateral to secure repayment. Unlike unsecured promissory notes, this document provides you with enhanced legal protection and recovery options if the borrower defaults on their obligations.

When do you need this document?

You need a secured promissory note when lending money to individuals or businesses where you require additional security beyond the borrower's promise to pay. This document is essential for property developers seeking bridge financing, small business owners obtaining working capital loans, or individuals making significant personal loans to family members or friends. It's particularly valuable when the loan amount is substantial or when you have concerns about the borrower's creditworthiness. The security element makes this document suitable for situations where you want to minimise your risk exposure while maintaining a formal lending relationship.

Key legal considerations

The security clause is the most critical component of your promissory note, as it determines what assets you can claim if repayment fails. You must clearly describe the collateral, including property addresses, vehicle registration numbers, or business asset details. The interest rate provisions should comply with Singapore's regulatory framework and avoid usury concerns. Default clauses must specify clear triggers and remedies, including your right to enforce security and recover costs. Consider including acceleration clauses that make the entire debt due upon default, and ensure proper notice requirements are outlined. If the security involves real property, you may need to register your interest with the Singapore Land Authority to perfect your security rights.

Legal requirements in Singapore

Your secured promissory note must comply with the Contracts Act, which governs contract formation, validity, and enforceability in Singapore. If either party is a company, the Companies Act requires registration of charges with ACRA within 30 days of creation. The Securities and Futures Act may apply if your note qualifies as a security, particularly in business lending contexts. The Moneylenders Act could be relevant if your lending activities fall within regulated moneylending business scope. Property-secured notes must comply with the Property Act regarding creation and enforcement of security interests. Ensure your document includes proper execution requirements with witnesses where necessary, and consider whether stamp duty applies under the Stamp Duties Act depending on the loan amount and security type.