Simple Interest Promissory Note Template for the United States

A simple interest promissory note documents a loan with clear, straightforward terms and protects both the lender and the borrower under United States law. It creates a legally binding obligation to repay a debt, records the fixed interest rate, and sets the repayment schedule, while aligning with federal lending rules and state-specific requirements. You can complete the template on screen, edit any clause, sign it, and download the finished note as a PDF.

What is a simple interest promissory note?

Simple interest is calculated only on the outstanding principal sum, never on accrued interest. That keeps the math predictable for both parties. The note names the maker (the borrower who promises to pay), the party receiving payment (the lender), the principal amount, the annual interest rate, the payment frequency, and the maturity date when the balance falls due. Because interest never compounds, the total cost of the loan is easy to verify against the payment schedule. The phrase "for value received" confirms that the note maker got something of value (usually the loan funds) in exchange for the promise to pay, which is what makes the promise enforceable.

How is simple interest calculated? A worked example

Simple interest uses the formula Principal x Rate x Time. Suppose the maker borrows a principal sum of $10,000 at a fixed rate of 6% for one year. The interest is $10,000 x 0.06 x 1 = $600, so the borrower repays $10,600 in total. Over two years at the same rate, interest is $10,000 x 0.06 x 2 = $1,200. The rate applies to the original principal each period, which is what distinguishes a simple interest note from a compounding one.

When do you need this document?

You need a simple interest promissory note whenever a personal loan or business loan should be documented in writing. Common situations include family loans where both sides want clear repayment expectations, small business financing, real estate deals involving seller financing, and any arrangement where an informal loan could lead to a dispute. The note is especially useful between friends or relatives who want professional boundaries while keeping the relationship intact. Business owners use it for equipment financing, working capital, or extending payment terms to a partner or customer.

What information do you fill in?

To complete the note, enter the full legal name of each party (the maker and the lender), including a company name where a business is borrowing or lending, the date value is received, the principal sum, and the fixed interest rate. Then add the payment amount, the number of payments or the payment schedule, and the maturity date. The template covers these core fields:

• Note maker and lender. The full legal name of the borrower who promises to pay and the party receiving payment, whether an individual or a company.
• Date value is received. The calendar date the borrower receives the funds, which fixes when interest starts to accrue.
• Principal sum and fixed rate. The amount borrowed and the annual simple interest rate applied to it.
• Payment schedule and maturity date. The payment amount, how often payments fall due, and the date the full balance must be repaid.
• Notice and rights. Where written notice must be sent, and the rights each party reserves on late payment or default.

Optional sections cover late fees, prepayment terms, and whether the loan is secured by collateral. Once every field is filled, review the terms, sign, and download the document as a PDF ready to be executed by both parties.

What are the key legal considerations?

For the note to be enforceable it should contain a clear promise to pay that identifies the principal amount and the maker's commitment. The interest rate section needs accurate calculation methods and an annual percentage rate disclosure to satisfy federal Truth in Lending Act requirements. Payment terms should state the schedule, the payment amounts, and acceptable payment methods, and the maturity date fixes when the full balance is due. Default provisions should set out the consequences of non-payment, including any acceleration clause that makes the balance immediately due, the collection procedure, and any attorney's fees the lender may recover. A rights reserved clause confirms that a lender who waives one late payment does not give up the right to enforce later terms. A co-signer clause adds security when lending to someone with a limited borrowing history or unverified income. You may also want to review our loan agreement template for larger or more structured financing.

What are the legal requirements in the United States?

Federal rules shape the note's structure and disclosures. The Truth in Lending Act calls for clear disclosure of lending terms and costs, and Federal Reserve Regulation Z sets the rules for interest calculations and APR disclosure. The Equal Credit Opportunity Act bars discrimination in lending decisions, and the Fair Credit Reporting Act governs how borrower information may be used, including your privacy over personal financial data. Usury laws cap the maximum lawful interest rate and vary widely by jurisdiction, sometimes with exceptions for particular loan types or lenders. Under the Statute of Frauds, a promissory note is best set out in writing and signed to be enforceable. The note should name which jurisdiction's law governs the agreement, usually the lender's home state or where the loan is made. Some jurisdictions require specific wording or formatting, particularly around collection and default remedies, for the note to be enforceable.