What This Interest-Only Promissory Note Template Covers

This interest-only promissory note template is designed for individuals or businesses looking to formalize a loan agreement that features interest-only payments and a balloon payment structure. The template includes essential clauses that outline the responsibilities of both the borrower and lender, ensuring clarity and legal compliance.

When to Use a Balloon Payment Loan Agreement

You should consider using this balloon payment loan agreement when you need to structure a loan that allows for lower initial payments followed by a larger final payment. This is particularly useful for borrowers who anticipate increased cash flow in the future or for lenders who want to minimize risk during the loan term. Specific scenarios include funding a business expansion or financing a real estate investment.

What's Included in This Loan Agreement Template

• Parties: Clearly identifies the borrower and lender, including their full names and addresses.
• Principal Amount: Specifies the total amount of money being loaned.
• Interest Rate: Details the interest rate applicable to the loan, allowing for transparency in payment calculations.
• Payment Schedule: Outlines the frequency of interest payments and the due dates.
• Maturity Date: States when the loan must be fully paid off, including the balloon payment.
• Default: Describes the conditions under which the borrower may default on the loan and the consequences thereof.

Key Provisions of This Interest-Only Loan Document

• Interest-Only Payments: This clause allows borrowers to make only interest payments during the term of the loan, making it easier to manage cash flow.
• Balloon Payment: Specifies the large final payment due at the end of the loan term, which can be a significant financial consideration.
• Default Terms: Establishes clear guidelines for default situations, protecting both parties in case of non-payment.
• Governing Law: Identifies the legal jurisdiction that governs the agreement, ensuring that both parties understand their rights and obligations.

Disclaimer: This template is for informational purposes only and does not constitute legal advice.