secured-promissory-note

name	secured-promissory-note
description	Drafts U.S. secured promissory notes for commercial lending with lender-protective terms, UCC Article 9 collateral grants, and state usury compliance. Trigger when the user needs a secured promissory note, lender note, collateral-backed loan note, or UCC-1 financing instrument.
tags	["agreement","corporate","drafting","transactional"]

Secured Promissory Note

Draft an enforceable secured promissory note for a commercial loan with collateral-backed repayment.

Quick Start

Gather before drafting:

1. Parties — borrower and lender legal names, entity types, states, addresses, authorized signatories.
2. Deal terms — principal, interest structure (fixed/variable, index, margin, floor/cap), day-count convention, payment schedule, maturity, prepayment, fees, default rate.
3. Collateral — description with sufficient detail for UCC Article 9; filing jurisdictions (debtor location, fixture/real property).
4. Governing law — state, venue, dispute resolution preference.
5. Related documents — security agreement, guaranty, subordination/intercreditor, board/manager approvals.

Workflow

1. Collect intake fields; flag unresolved items before drafting.
2. Draft using the section outline and template below.
3. Insert optional clauses only when deal-specific.
4. 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

1. Title, date, parties
2. Promise to pay; principal; use of proceeds
3. Interest rate; day-count; default rate; usury savings clause
4. Payment schedule; application waterfall; late charges; non-business days
5. Prepayment terms and penalties
6. Collateral grant; proceeds; security agreement reference
7. Perfection authorization (UCC-1 filings)
8. Representations and warranties
9. Affirmative and negative covenants
10. Events of default; notice and cure periods
11. Remedies; acceleration; UCC Article 9 enforcement; costs/fees
12. Waivers (presentment, demand, notice)
13. Governing law; venue; jury trial waiver or ADR
14. Notices; assignments; successors; integration; severability
15. 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.