Loan Document Templates
Loan documents put the terms of a borrowing arrangement in writing so both lender and borrower have a clear record of the obligation, the repayment schedule, and the consequences if payments are missed. Templates in this collection cover the common contexts including formal promissory notes with interest and collateral provisions, personal loan agreements between family or friends, IOU notes for smaller informal loans, repayment schedules with amortisation tables showing principal and interest over time, business loan agreements between companies, and loan modification agreements for adjusting existing terms. Each one includes the core elements: loan amount, interest rate (if any), repayment schedule, late payment terms, default conditions, and signatures of both parties. State usury laws cap interest rates, so verify limits before setting terms.
Loan documents between family members and friends are often skipped to avoid awkwardness, which is exactly why they should be written down. The friction of asking for a written agreement is small compared to the friction of a damaged relationship when memory differs about repayment terms, interest, or what the loan was for. A simple promissory note signed at the time of the loan removes the basis for future disputes by establishing the amount, the repayment schedule, any interest, and the consequences of late or missed payments. Both parties retain a copy and the relationship moves forward with the terms clear rather than implicit.
For loans of significant amount between family members, document the loan in a way that satisfies the IRS if either party is audited. Loans above the annual gift tax exclusion that are not properly documented can be reclassified as gifts, with tax consequences for the lender. Charge at least the IRS applicable federal rate (AFR) as interest to avoid imputed interest issues, document payments received, and maintain records as you would for any business loan. For loans with no realistic expectation of repayment, treat them as gifts from the start rather than loans, since calling a gift a loan creates record-keeping complications without providing any of the actual protections of a loan.