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Balloon Note
Clearly outline repayment terms and final lump-sum payment obligations with this Balloon Note Template.
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Balloon Note Template
This Balloon Note (“Note”) is made and entered into on [Date], by and between:
Lender:
Name: __________________________
Address: __________________________
Phone: __________________________
Email: __________________________
Borrower:
Name: __________________________
Address: __________________________
Phone: __________________________
Email: __________________________
Collectively referred to as the “Parties.”
1. Principal and Interest
The Borrower promises to pay the Lender the principal sum of $[Principal Amount], with interest at the rate of [Interest Rate]% per annum, calculated on the outstanding balance.
2. Payment Schedule
The Borrower shall make [Monthly/Quarterly] payments of $[Amount] each, beginning on [Start Date] and continuing on the [Day] of each month thereafter until [Maturity Date].
On [Maturity Date], a final balloon payment of $[Balloon Amount] shall be due, representing the remaining balance of the principal and any accrued interest.
3. Prepayment
The Borrower may prepay the Note in whole or in part at any time without penalty. Prepayments will first be applied to accrued interest, then to principal.
4. Default
The Borrower shall be in default if:
Any scheduled payment is not made within [X] days of its due date.
The Borrower becomes insolvent, files for bankruptcy, or breaches any material term of this Note.
Upon default, the Lender may declare the entire outstanding balance immediately due and payable.
5. Collateral (if applicable)
This Note is secured by the following collateral:
[Description of collateral, e.g., real estate, equipment, vehicle]
The Lender may repossess or foreclose on the collateral in accordance with applicable law if the Borrower defaults.
6. Notices
All notices under this Note shall be in writing and delivered personally or sent by certified mail to the addresses listed above.
7. Governing Law
This Note shall be governed by and construed in accordance with the laws of [State/Country].
8. Binding Effect
This Note shall bind and benefit the Parties and their respective heirs, successors, and assigns.
9. Entire Agreement
This document constitutes the entire agreement between the Parties and supersedes all prior negotiations or understandings.
Signatures
Lender Signature: ____________________________ Date: _________
Printed Name: _________________________________________
Borrower Signature: ____________________________ Date: _________
Printed Name: _________________________________________
Details
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Balloon Note
BALLOON NOTE FAQ
What is a Balloon Note?
A Balloon Note is a type of promissory note that allows the borrower to make smaller, regular payments over the term of the loan, followed by a large final payment — the "balloon" — at maturity.
Why is a Balloon Note important?
It provides flexibility for borrowers who expect increased future income or a refinancing opportunity while giving lenders a predictable repayment structure and security for the final balance.
When should you use a Balloon Note?
Use this note for real estate transactions, business loans, or equipment financing where the borrower needs lower payments upfront but can cover a large balance later.
What should a Balloon Note include?
It should specify the principal amount, interest rate, periodic payment schedule, balloon payment amount, due dates, default terms, and governing law.
What are the risks of a Balloon Note?
The borrower must be confident they can make the final lump-sum payment. Failure to pay may result in default, foreclosure, or repossession of collateral.
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