Guides to lending and borrowing privately.
How to document a loan, what interest to charge, how a schedule works, and what to do when payments slip. Written for people doing this for the first time.
What a promissory note is and what it must say
What a promissory note is, the terms it has to contain to be enforceable, how it differs from an IOU, and how to sign and keep one for a private loan.
6 minute read
How to lend money to family
How to lend money to a relative without damaging the relationship: decide gift or loan, agree terms, sign a promissory note, set a rate, and keep the record.
6 minute read
What interest rate to charge on a family loan
How the IRS treats low-interest family loans under section 7872, what the applicable federal rate is, the $10,000 and $100,000 exceptions, and how to set a rate.
6 minute read
Promissory note vs loan agreement
What a promissory note and a loan agreement each do, when a note alone is enough, when you want both, and what neither does about collateral.
6 minute read
How an amortization schedule works
Read an amortization schedule column by column, see how the level payment is found, and learn what late and extra payments do to the balance.
6 minute read
Interest-only, amortizing, or fixed principal
The three ways to structure repayment on a private loan, with the same $25,000 example worked under each, and which one fits which borrower.
6 minute read
Lending money to a friend without losing the friend
How to lend a friend money and stay friends: when to write it down, what a simple note changes, how to set a schedule they can keep, and what to do if payments stop.
5 minute read
Lending money to your own business
How an owner lends to their own company properly: why a documented loan beats a transfer, what the note should say, setting a rate, recording consent, and repayment.
6 minute read
Seller financing: the promissory note and what goes with it
How seller financing works, the three documents it needs, the terms sellers commonly use, what regulation applies to a home, and how the loan is serviced and closed out.
6 minute read
When a borrower pays late
What to do when a private loan payment is missed: what the note already says, how to record it, the options from waiting to a lawsuit, and when to write it off.
6 minute read
Can a promissory note be signed electronically?
Yes, under ESIGN and UETA. What makes an electronic signature valid, what a signing record should contain, when a notary is still needed, and how to store the note.
6 minute read
What a payoff statement is and how to get one
Why the balance on a schedule is not the payoff amount, what a payoff statement contains, how per diem interest works, and how to close a private loan.
6 minute read