Unsecured Promissory Note: Financing Your Business with Loans from Insiders

Benefits: The attached file contains a sample unsecured promissory note that can be customized to document a loan to you from a family member, friend, or other private party. The form is designed to help prove that you have established a formal debtor/creditor relationship and that the exchange of money is a loan, not a gift. Executing a promissory note and adhering to its terms will help reduce the risks from gift tax issues, conflicts of interest and mismanagement claims, and personal misunderstandings between insiders and entrepreneurs.

Keep in mind that this form is a starting point, not a finished product. You'll want to customize it to make sure that the agreement reflects the understanding between your business and the lender.


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Special Features: The concise sample promissory note covers:

As with all contracts and legal documents, it's always a good idea to consult a local lawyer or the laws of the state regarding limitations or requirements affecting promissory notes (most notably the default and confession of judgment options).