Loan Note & Promissory Note Templates

Loan notes and promissory notes are both financial instruments that evidence debt. They provide a simple, legally binding way to acknowledge what is owed and how it will be repaid, without using a full loan agreement where that would be unnecessary or inappropriate.

They are often used for short-term lending and simpler arrangements, including loans between individuals, a company and an employee, or a club or society raising small amounts from a larger member base.

These templates are drafted by experienced solicitors and written in plain English for UK use.

When Should You Use These Templates?

✅ You need a simple written debt instrument and a full loan agreement is not required
✅ The loan is short term or relatively small and you mainly need a clear promise to pay
✅ The arrangement is between individuals (with or without interest)
✅ A company is borrowing from an employee or other individual and you want a clear repayment record
✅ You want a note with interest and repayment by instalments, rather than a lump-sum repayment
✅ You are issuing loan notes to raise finance and need the note plus board approval paperwork

Promissory Notes: What Are They?

A promissory note is a written, dated and signed unconditional promise by the maker to pay a definite sum of money to a payee, either on demand or at a specified future date. A promissory note can also provide for interest to be payable.

A promissory note is signed by the promisor (the maker) and not by the payee (the lender).

Transferability and execution:
Promissory notes are negotiable instruments, meaning the right to be paid under the note can be freely transferred.
In the case of promissory notes, the law presumes (contrary to the usual rules of contract) that consideration is provided. It is therefore not necessary to execute a promissory note as a deed.

Which Promissory Note Should You Use?

This collection includes several versions of the promissory note, tailored for companies and individuals:
Promissory Note (Basic) is best suited for small loans between individuals where no interest is payable.
Promissory Note - Company (Basic) is the equivalent version for use by a company where no interest is payable.
Other versions include provision for interest and for repayment by instalments, and there is also a Promissory Note (Joint & Several) version where appropriate.

Loan Notes: What Are They?

A loan note is, on the whole, a more sophisticated financing arrangement than a promissory note. The lender (noteholder) effectively buys a loan note from the borrower (the issuer) in exchange for the issuer’s obligation to pay for the notes in the future in accordance with the terms and conditions of the loan.

The loan note is executed as a deed.

Loan notes can be issued to represent deferred consideration, amongst other things, in a sale and purchase of property. However, the loan note instrument in this collection has been created purely to raise finance.

How our loan notes are drafted:
Our loan notes are drafted in a simple, unsecured form of certificate, with interest payable and a redemption date specified.
They are also drafted as non-transferable.
This collection includes both a long and short form loan note.

What Do You Need To Decide First?

Promissory note or loan note? Use a promissory note where you want a simple unconditional promise to pay. Use a loan note where you need a more structured financing instrument (executed as a deed).
On demand, future date, or instalments? Decide whether repayment is on demand, on a specified date, or by instalments (and whether interest applies).
Individual or company? Choose the correct version for the parties involved and make sure execution blocks match the capacity in which they sign.
Do you want transferability? Promissory notes are intended to be freely transferable; our loan notes are drafted as non-transferable.

🔀 Document Toolkit: Typical Sequence

❗Loan notes can be complex documents and there can be tax implications to their use. Independent legal and tax advice should be considered.

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