month on the loan in the first two years. After he explained his problem to the loan officer, the bank offered Charlie interest-only payments for the first two years. That was a much better deal and Charlie took it.
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Example 1:
Promissory Note Robert Lee of 1411 South St., Homer, Alaska, and Gertrude Fox of 123 Main St., Fairfax, Alaska, agree that Gertrude Fox hereby lends Robert Lee the sum of
Plan in Advance for Legal Details Taking money into your business requires lots of legal documentation. You will present a more professional image if you understand some of the basics.
Loans Whatever loan you arrange will have to be reduced to writing. If you deal with a bank or other institutional lender, it will have the necessary forms. However, if your arrangement is with a friend, family member, or private investor, these details will probably be up to you. If your loan is simple—a specific amount of money, at so much interest, to be paid at regular intervals—you can safely design it yourself. While a course in contract law is beyond the scope of this book, the sample notes provided may help you focus on this task. However, if the loan involves complicated default provisions, security, and balloon payments, you and the person you are dealing with would be wise to have it checked by an attorney. If you have done most of the work, this shouldn’t be expensive; negotiate the fee in advance.
Fifty-Six Thousand ($56,000) Dollars to be repaid on the following terms: 1. Principal and interest of 10% per year will be paid in equal monthly installments on the first day of each month beginning the first day of September 2006 and continuing through the first day of August, 2007. 2. On September 1, 2007 the entire unpaid balance of principal and interest shall be due and payable in full. 3. Should Robert Lee fail to pay an installment on the date due, as set out in Paragraph 1 of this agreement, the whole sum of the principal and interest then outstanding shall, at the option of Gertrude Fox or any subsequent holder of this note, immediately become due and payable. 4. Should Robert Lee fail to meet any condition of this agreement, and should Gertrude Fox or any subsequent holder of this note take legal action to collect it, Robert Lee shall be responsible for all attorney’s fees and costs. Date Date
Robert Lee Gertrude Fox