ThomasMoreAI Secured Promissory Note
Draft an enforceable secured promissory note for a commercial loan with collateral-backed repayment.
Quick Start
Gather before drafting:
- Parties — borrower and lender legal names, entity types, states, addresses, authorized signatories.
- Deal terms — principal, interest structure (fixed/variable, index, margin, floor/cap), day-count convention, payment schedule, maturity, prepayment, fees, default rate.
- Collateral — description with sufficient detail for UCC Article 9; filing jurisdictions (debtor location, fixture/real property).
- Governing law — state, venue, dispute resolution preference.
- Related documents — security agreement, guaranty, subordination/intercreditor, board/manager approvals.
Workflow
- Collect intake fields; flag unresolved items before drafting.
- Draft using the section outline and template below.
- Insert optional clauses only when deal-specific.
- Run the review checklist.
Intake Fields
| Field | Req | Notes |
|---|---|---|
| Borrower name, entity, state, address | Yes | Exact registered name and suffix |
| Lender name, entity, state, address | Yes | Match org docs |
| Effective date / funding date | Yes | Note if different |
| Principal amount | Yes | Numeric and words |
| Interest rate type | Yes | Fixed/variable; index, margin, floor/cap |
| Day-count convention | Yes | actual/360, actual/365, or 30/360 |
| Payment schedule | Yes | Frequency, amortization or balloon |
| Late fee / grace period | Yes | — |
| Default interest rate | Yes | Confirm within legal limits |
| Prepayment terms | Yes | Penalty, exceptions |
| Collateral description | Yes | Category + itemized detail |
| UCC filing jurisdictions | Yes | Debtor location; fixture/real property filings |
| Covenants | Opt | Reporting, insurance, restrictions |
| Cross-default thresholds | Opt | Other debt, judgments |
| Notice addresses / methods | Yes | Delivery methods, deemed receipt |
Section Outline
- Title, date, parties
- Promise to pay; principal; use of proceeds
- Interest rate; day-count; default rate; usury savings clause
- Payment schedule; application waterfall; late charges; non-business days
- Prepayment terms and penalties
- Collateral grant; proceeds; security agreement reference
- Perfection authorization (UCC-1 filings)
- Representations and warranties
- Affirmative and negative covenants
- Events of default; notice and cure periods
- Remedies; acceleration; UCC Article 9 enforcement; costs/fees
- Waivers (presentment, demand, notice)
- Governing law; venue; jury trial waiver or ADR
- Notices; assignments; successors; integration; severability
- Signature blocks and execution
Collateral Schedule (Exhibit A)
Category:
Specific Description:
Location:
Title/Registration Data (if applicable):
Optional Clauses
Include only when applicable:
- Balloon payment provision
- Interest-only period
- Cross-default to other material debt
- Judgment default threshold
- MAC clause
- Subordination / intercreditor references
- Cash dominion or lockbox
Review Checklist
- Defined terms used consistently throughout
- Interest and fees within applicable usury limits
- Collateral description sufficient for UCC filing
- Cure periods aligned with lender policy
- Notice addresses and delivery methods complete
- Signatory authority confirmed
Pitfalls
- Usury — always include a usury savings clause; verify default interest and late fees against governing-state limits.
- Real property collateral — reference the mortgage or deed of trust; the note alone is insufficient.
- Titled assets / IP — add perfection steps matching title or federal registration practices.
- Default categories — distinguish monetary vs. non-monetary defaults with explicit cure periods.
- Remedies — must include acceleration and Article 9 disposition rights with commercially reasonable notice.
- Consumer loans — omit consumer-law disclosures unless the loan is consumer-purpose or to an individual borrower.
- Assignments — borrower assignment typically prohibited; lender assignment typically permitted with notice.
- Jury trial waiver — include only if enforceable in governing jurisdiction and parties are sophisticated.