What Is an Unsecured Promissory Note?

An unsecured promissory note is a written guarantee, if you will, from one party (the “Maker”) to repay a loan to another party (the “Holder” or lender), without requiring any surety.

Unlike a secured note, there’s no need to tie up assets, such as property or equipment. Instead, the whole agreement is based on trust and a clear plan for repayment.

This template by fynk is designed to make the procedure professional and stress-free.

Who Should Use This Template?

This template is a brainy choice for startups and small businesses seeking a straightforward, no-collateral advance. It’s equally useful for investors and private lenders who want their agreements to be well-defined and enforceable. And if you’re giving money to friends or family, it helps prevent misunderstanding and keeps everyone on the same page.

If you’re looking for a way to formalize a loan, set clear expectations, and protect both parties, this template is for you.

Key Benefits of Using this Note

• No Security needed. ‘Unsecured’ means that you ****don’t have to put any big assets like a house or business property at risk. This speeds up the entire process of borrowing and lending, making it easier for users.

• Clear Payment Plan. Our template includes an unpretentious payment schedule table. Both parties will know exactly what is due, when it’s due, and how much goes toward the principal payment and interest.

• Flexible Terms. You might wish to complete all payments before the due date. That’s totally allowed! The template allows for early repayment with no consequences, giving borrowers the freedom to settle up whenever it suits them.

• Windfall Clause. If the borrower can pay off the loan faster because of some or other windfall, he is allowed to.

• Built-in Legal Protection. The template includes prearrangements that outline what would happen if the borrower fails to make payments. This gives clear options for resolving the matter and therefore protects the interests of both the parties.

• Fully Customizable. Just fill in the names, dates, amounts, and any special terms. Whether you want to use it straight out of the box or make changes, it’s up to you.

When Should You Use an Unsecured Promissory Note?

Choose this template for loans that are too big for a simple handshake, but don’t require assets as security.

It’s designed for those trusted relationships where clarity matters.

What’s Included in This Promissory Note Template

• The template gives you the loan amount, the terms the parties agreed upon, and a payment schedule so that each payment can be tracked.
• Both sides can easily track how each payment is split between principal and interest, as well as see the updated balance.
• Interest terms are laid out in plain language.
• Early repayment is allowed at any time, with no consequences.
• The template covers windfall events and provides guidance in the event that the borrower falls behind.
• It’s easy to personalize with your own names, dates, amounts, and legal jurisdiction.

Special Clauses and Considerations

• Windfall Clause. If the borrower comes into extra funds, this feature requires part of it to be used for the loan, so lenders benefit from any financial upswing.

• No Security, But Oddly, Still Secure. Despite being called ‘unsecured’, this template’s detailed legal stipulations make sure that both parties are protected.

• Early Repayment. You can pay off your balance before the due date, and there are no drawbacks for doing so. This flexibility is especially sweet for small businesses and startups that may go through periods of fluctuating cash flow.

• Default and Remedies. If the borrower falls behind on payments, the agreement in the template clearly outlines the next steps and the lender’s options.

How to Use This Template.

• Get the template. It is easy! Click on the button to access and you’ll be redirected to the template.

• Now, fill in the details. Add the names of the borrower and lender, the interest rate, the loan amount, repayment timetable, and any other specific terms you might want to. This step is super easy, thanks to the form-like interface of fynk editor.

• Review the draft. Use fynk’s inline commenting and redlining to make changes or suggestions. Playbooks and Checkpoints help ensure both parties and internal reviewers like Legal or Finance, sign off before moving forward.

👉 Tip: Need help with review? Here’s how to review a business contract effectively

• Sign and date. Use built-in electronic signatures (SES, AES, or QES) to sign the contract digitally. Signature order can be enforced, and both internal and external parties are guided through the process with real-time status tracking and notifications.

• Keep a copy. Your signed contract is saved with full version history and audit trail in a safe place.

Tips for Making the Most of Your Unsecured Promissory Note

• Be as specific and clear as possible. You won’t be sorry! The more detail, the better. Specify the loan amount, payment schedule, interest rate, and any special terms.

• Talk about the windfall clause: Make sure both parties know what will count as a windfall and how much will be paid if one happens.

• Go over the default provisions: Know what happens if a payment is missed, and make sure both sides are okay with the process.

• Communication is key. If things change, talk it out and update the agreement if you need to. Our template is fully editable, precisely for this reason.

FAQs

Is an unsecured promissory note legal?

Yes! As long as both parties sign and date the agreement, it will be a legally enforceable contract.

What happens if the borrower falls behind in payments?

The template includes clear default procedures and remedies.

Can I use this template for personal loans?

Absolutely. It’s suitable for business or personal loans. In fact, any situation where a clear, written agreement is desired is ideal.