Pennsylvania Promissory Note
Pennsylvania promissory note template with the 6% usury cap and 4-year statute of limitations under state law. Free template. Attorney review available.
Introduction
Pennsylvania is one of a shrinking number of states where a business note's confession-of-judgment clause can end in a courthouse the same day the maker defaults: the payee's attorney files with the prothonotary and judgment enters with no hearing. Pennsylvania's own Commercial Code, at Section 3104(a)(3)(ii), names that power as a clause a note can carry without losing its status as a negotiable instrument. That power disappears the moment the maker is an individual borrowing for personal, family, or household purposes: Pennsylvania Rule of Civil Procedure 2950 voids a confession of judgment against a natural person in a consumer transaction. A promissory note is a written, signed promise by one party, the maker, to pay a definite sum to another, the payee, on demand or by a set date, and the template below turns that promise into an actual fillable document. Pennsylvania's usury cap is 6% per year on a loan of $50,000 or less, but the exemption list swallows most of what the cap would otherwise cover: any business loan of any size, any loan over $50,000, and any unsecured loan over $35,000 are all exempt entirely. A Pennsylvania note doesn't need to be notarized or witnessed to be enforceable, and you generally have 4 years from a missed payment or the note's due date to sue to collect.
Key Things to Know
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A promissory note is a written, signed promise by one party (the maker) to pay a definite sum of money to another party (the payee), either on demand or by a set date.
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Pennsylvania's usury cap (the legal ceiling on interest) is 6% per annum, but only for a loan of $50,000 or less that doesn't fall into an exemption. Any business loan of any principal amount, any loan over $50,000, any unsecured loan over $35,000, and any FHA- or VA-insured loan are exempt from the cap entirely. (41 P.S. Section 201)
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Charging more than the lawful rate has real consequences: the borrower can recover triple the excess interest paid, plus attorney's fees, in a civil suit filed within 4 years of the overpayment, and knowingly charging an unlawful rate is separately a misdemeanor of the third degree. (41 P.S. Section 502; Section 505(a))
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A Pennsylvania promissory note does not need to be notarized or witnessed to be enforceable. 13 Pennsylvania Consolidated Statutes Section 3104 lists what makes a note a valid negotiable instrument (an unconditional promise, a fixed amount, a signature, payable on demand or by a definite date), and notarization isn't one of the requirements.
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Confession-of-judgment clauses (a clause letting the payee, through the court prothonotary, obtain judgment against the maker without a hearing) are permitted in a business or commercial note, and Pennsylvania's Commercial Code specifically lists this power as compatible with a note's negotiability. Pennsylvania Rule of Civil Procedure 2950 voids the clause entirely if the maker is an individual borrowing primarily for personal, family, or household purposes.
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You generally have 4 years from a missed payment or the note's stated due date to sue to collect on a written promissory note in Pennsylvania. (42 Pennsylvania Consolidated Statutes Section 5525)
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If a Pennsylvania promissory note is secured by personal property rather than real property, the lender generally needs to file a UCC-1 financing statement with the Pennsylvania Department of State to protect its priority against other creditors. (13 Pennsylvania Consolidated Statutes Section 9310) Promissory notes are commonly used in Pennsylvania for family loans and business or LLC loans; a lender only needs a Consumer Discount Company license if it is engaged in the business of making loans of $25,000 or less above the otherwise-lawful rate, not for an isolated private loan.
Key decisions before you file
Before you file a Promissory Note in Pennsylvania, a few decisions shape the document: which option to choose and what each one means. The Promissory Note guide walks through them.
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Pennsylvania Requirements for Promissory Note
For a loan of $50,000 or less that does not fall into a statutory exemption, the maximum is 6% per annum. Any business loan of any size, any loan over $50,000, any unsecured loan over $35,000, and any FHA- or VA-insured loan are exempt from the cap entirely.
A borrower who paid interest above the lawful rate may recover triple the excess, plus reasonable attorney's fees, in a suit filed within 4 years of the overpayment. Knowingly and intentionally charging an unlawful rate is separately a misdemeanor of the third degree under Section 505(a).
To be a valid negotiable instrument, a note must be an unconditional promise to pay a fixed amount, signed by the maker, and payable on demand or at a definite time. The statute also expressly allows the promise to carry an authorization to confess judgment without losing negotiability.
A confession-of-judgment clause is void and unenforceable in any instrument signed by a natural person for a consumer credit transaction (a loan primarily for personal, family, or household purposes). The clause remains available in a business or commercial note, entered through the prothonotary without a prior hearing.
Generally 4 years from a missed payment or the note's stated due date to sue to collect on a written promissory note. For a demand note, the period runs from the later of a demand or a payment of principal or interest.
A person engaged in the business of negotiating or making loans of $25,000 or less generally needs a Consumer Discount Company license from the Department of Banking and Securities to charge interest above the otherwise-lawful rate on such a loan. An isolated private person-to-person loan does not trigger this licensing requirement.
If a note is secured by personal property, the lender generally must file a UCC-1 financing statement with the Pennsylvania Department of State to perfect and prioritize its security interest against other creditors.
Pennsylvania does not require a promissory note to be notarized or witnessed to be enforceable. 13 Pennsylvania Consolidated Statutes Section 3104's list of what makes a note a valid negotiable instrument does not include notarization or witnessing; notarization is optional and used only for evidentiary purposes.
Frequently Asked Questions
For a loan of $50,000 or less, Pennsylvania caps interest at 6% per year, unless the loan falls into an exemption. Any business loan of any size, any loan over $50,000, any unsecured loan over $35,000, and any FHA- or VA-insured loan are all exempt from the cap entirely.
No. 13 Pennsylvania Consolidated Statutes Section 3104 lists what makes a note a valid, enforceable negotiable instrument, and notarization isn't one of the requirements. Notarizing a note is optional and can help as evidence of who signed it, but it doesn't affect enforceability.
Include the principal amount, an interest rate within Pennsylvania's usury cap, the repayment schedule, what counts as default, and the signatures of the maker and payee. Only include a confession-of-judgment clause if the note is a business or commercial loan; that clause is void if the maker is an individual borrowing for personal, family, or household purposes.
Yes, as long as it meets the basic requirements of a valid contract and, if it's meant to be a negotiable instrument, the elements in 13 Pennsylvania Consolidated Statutes Section 3104: an unconditional promise to pay a fixed amount, a signature, and payment on demand or by a definite date. It doesn't need to be notarized to be enforceable.
An unsecured note relies only on the maker's promise to pay. A secured note is backed by collateral, and if it's secured by personal property rather than real estate, the lender generally needs to file a UCC-1 financing statement with the Pennsylvania Department of State to protect its priority against other creditors.
The payee can declare the remaining balance immediately due (if the note includes an acceleration clause) and can sue to collect. On a business or commercial note, a confession-of-judgment clause can let the payee enter judgment through the prothonotary without a hearing; that same clause is void if the maker is an individual borrowing primarily for personal, family, or household purposes, and enforcement then requires a regular lawsuit.
Generally 4 years from a missed payment or the note's stated due date, under Pennsylvania's statute of limitations for actions on a written instrument (42 Pennsylvania Consolidated Statutes Section 5525). Waiting too long can mean losing the right to sue on the note.
Yes. Promissory notes are commonly used for both family loans and business or LLC loans in Pennsylvania. A business loan is exempt from the 6% usury cap regardless of size, and a lender only needs a Consumer Discount Company license if it's engaged in the business of making loans of $25,000 or less above the otherwise-lawful rate, not for an isolated private loan.