An “I Owe You,” commonly known as an IOU, is a simple agreement made between two parties who need to establish the terms of a loan. Typically, these sorts of loan agreements are used between parties who are familiar with each other, e.g., family, friends, or business partners. This template is a standard IOU agreement that you can use and customize as needed.
This Agreement is entered into on [Document.CreatedDate] by and between:
Borrower: [Borrower.FirstName] [Borrower.LastName] (“Borrower”), with a mailing address of [Borrower.StreetAddress] , [Borrower.City] , [Borrower.State] [Borrower.PostalCode] , and
Lender: [Lender.FirstName] [Lender.LastName] (“Lender”), with a mailing address of [Lender.StreetAddress] , [Lender.City] , [Lender.State] [Lender.PostalCode] .
The Lender agrees to lend to the Borrower under the following terms:
Principal Amount:($amount being borrowed)
Interest Rate:(interest rate)% compounded per: Month/Day/Year
Date Borrower Will Receive Borrowed Funds:(Date)
Collectively, this will hereinafter be known as the “Borrowed Funds.”
Not all lenders want to be compensated for the loan, especially in cases of loans for family or friends. However, if you’re a lender and you do want to be compensated for the loan you’re providing, you can specify the interest rate that will apply to this loan.
The Borrower agrees to repay the entire balance of the Borrowed Money to the Lender, including all accrued interest and any other fees or penalties, under the following agreement:
The Borrower shall make a lump sum payment to repay the Borrowed Money in full, in the amount of $(amount including principal and interest) by (“Due Date”).
The Borrower shall pay principal and interest installment amounts equal to ($amount) with the first payment beginning on (date) and the remaining payments to be paid: (choose one of the installment options below and delete the others)
Weekly with any remaining balance payable on (“Due Date”).
Monthly with any remaining balance payable on (“Due Date”).
Quarterly with any remaining balance payable on (“Due Date”).
(Delete the payment arrangement, e.g., Lump Sum or Installments, that doesn't apply to your specific IOU agreement)
There are pros and cons of both lump sum payments and installment payments for both the borrower and seller, but the ultimate decision comes down to each individual situation. You can customize this template to make it work best for you by deleting irrelevant sections.
[Guarantor.FirstName] [Guarantor.LastName] ("Guarantor") agrees to guarantee to the Lender the full payment of the Borrowed Amount should the Borrower be unable or unwilling to repay the Borrowed Amount. The Guarantor agrees that this guarantee will remain in full force and effect until this Agreement is complete and the Borrowed Amount has been fully repaid.
A guarantor or cosigner is responsible for paying back a loan if the borrower is unable to. This provides an extra measure of protection for the lender. Having a guarantor isn’t required, but it may be requested by the lender, especially if there are concerns about the borrower’s ability to repay the loan.
This Agreement will inure to the benefit of and be binding on the respective successors and permitted assigns of the Borrower. The Borrower may not assign its rights or delegate its duties under this Agreement without the Lender’s prior written consent.
If there is more than one Borrower, the obligation of each Borrower shall be joint under the terms of this Agreement.
This Agreement may not be amended or modified in any way except by express written consent of both the Borrower and Lender.