Free Tennessee Promissory Note

Understanding Tennessee Promissory Notes

If you need quick financing to boost your start-up, you may consider a commercial loan. But what if you don’t have a solid credit rating and a cosigner to guarantee your loan? There are numerous alternatives you can explore, including signing a promissory note.

A promissory note is a simple legal contract you create with a potential financier. It also acts as a standalone agreement with the lender until you complete the loan.

Read on to understand how a promissory note works in the state of Tennessee.

What Is a Promissory Note?

A promissory note in Tennessee is an official contract defining the financial agreement between a lender and borrower.

The borrower uses the written document to affirm commitment to reimburse the loan balance within the agreed time. On the other hand, the lender uses the signed document to prevent financial losses if the borrower breaches the agreement.

Types of Promissory Notes

Promissory notes exist in two broad categories, including:

Secured Notes

Here, the borrower promises to clear the loan balance alongside a valuable item as collateral. As a requirement, the borrower should include detailed information about the collateral, including its value.

Unsecured Notes

An unsecured promissory letter doesn’t include a physical item for collateral. Moreover, the lender doesn’t reserve the right to the borrower’s property if a dispute occurs.

An unsecured note exposes the lender to the likelihood of a financial loss if the borrower doesn’t honor the agreement. Lenders should enter an unsecured agreement only when they are sure about their debtors’ credit history.

Tennessee Promissory Note: What’s the Interest Rate?

In Tennessee, promissory notes are subject to the state’s usury laws. According to Sections 47-14-103 and 47-14-105, the maximum interest rate remains 10% per annum if there’s no written agreement on interest. However, parties can use a formula published in the Administrative Register for documented interest rates.

How to Write a Promissory Note inTennessee?

Writing a promissory note begins by downloading a suitable form online. Once you find the correct format, you can fill out the required information as it suits your needs.

The following information comes in handy during the process:


A valid promissory contract must have a proper title depending on the type of the agreement. Label your promissory letter appropriately as either secured or unsecured.


The date helps you determine when to settle the loan according to the payment schedule. When writing the date, follow the prescribed format for the state jurisdiction. Most forms follow the month-day-year format.

Legal Names

A promissory contract has three main parties: borrower, lender, and cosigner (if available). When filling out the form, ensure you write all parties' legal names and roles, including corporate entities.

Mailing Addresses

Write the mailing addresses of all parties, specifying their zip codes, city and states of residence. Also, include the lender’s payment address if separate from the general mailing address.

Principal Amount

The form highlights the amount you receive from the lender in US Dollars.

Interest Rate

Include the interest rate as agreed or applicable in the contract. Generally, the interest rate shouldn’t exceed the maximum allowed in the usury laws.

Accrued Interest

Some lenders assess a higher interest rate owing to default. If applicable, the rate appears under accrued interest.

Payment Allocation

Describe how you’ll split the loan payment between interest and the principal amount.

Prepayment Fines

Some lenders may charge a penalty for paying the loan before the agreed date. It should appear in the form if applicable.

A promissory note offers flexibility and convenience of borrowing, unlike conventional loans. Even better, you don’t need to hire an attorney to take you through the tedious legal process when assigning a promissory letter. Instead, you can download a blank promissory note template from our website for a hassle-free experience.