Promissory Note
A borrower's signed promise to repay a loan: the amount, the yearly interest rate, how and when it is repaid, and what happens on a missed payment, with the repayment schedule worked out to the cent and the rate checked against the Interest Act and the criminal interest rate.
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Repayment schedule
| Payment | Date | Amount | Interest | Principal | Balance |
|---|---|---|---|---|---|
| 1 | December 1, 2026 | $1,010.02 | $15.00 | $995.02 | $2,004.98 |
| 2 | January 1, 2027 | $1,010.02 | $10.02 | $1,000.00 | $1,004.98 |
| 3 | February 1, 2027 | $1,010.00 | $5.02 | $1,004.98 | $0.00 |
| Totals | $3,030.04 | $30.04 | $3,000.00 |
3 monthly payments of $1,010.02, the last adjusted to the cent. Interest at 6% a year, calculated monthly on the unpaid balance.
Checks for the lender (not printed on the note)
| What | Result | Rule |
|---|---|---|
| Yearly rate stated on the note | 6% a year (effective 6.17% with monthly compounding): a rate stated only by the month or week would be capped at 5% a year | Interest Act s. 4 |
| Criminal interest rate | Under the limit of 35% a year (6.17%), counting all fees and charges as interest | Criminal Code s. 347 |
| Last day to sue if the final payment is missed | February 2, 2029 (2 years from the day after the final payment on February 1, 2027); each earlier missed payment runs from its own date | Limitations Act, 2002 s. 4, 5 (1) |
| A part payment or a signed written acknowledgement | Under the Limitations Act, 2002, starts the period again from that day if made before it runs out | Limitations Act, 2002 s. 13 (1), (10), (11) |
| Where to file for this amount | Small Claims Court: claims up to $50,000, not counting interest and costs | Courts of Justice Act s. 23 (1); O. Reg. 626/00 s. 1 |
Sample figures. Change them to work out your own, no sign-up. Then start free and your promissory note opens with these details filled in: 14-day trial, nothing charged today.
What goes in it
Every promissory note from ReportDraft follows the same professional structure, so clients and reviewers find things where they expect them.
- Promise to payThe promise to pay, in the standard wording filled in with your entries.
- Other termsAnything else the lender and borrower agree: security given, where payments are sent.
How it works
1. Enter the details. Names, dates and amounts, once. The next one starts from these entries.
2. Worked out for you. The repayment schedule, the interest and the checks against the criminal interest rate are worked out from your entries, and the standard wording is filled in.
3. Check, sign, keep. A completeness list shows anything missing. Sign to lock the PDF and download Word too.
Why it pays for itself
What Canadian federal rules require
- A promissory note is an unconditional promise in writing, signed by the maker, to pay on demand or at a fixed or determinable future time a sum certain in money to, or to the order of, a specified person or to bearerBills of Exchange Act, s. 176 (1)
- A note may be made by two or more makers; a note that says "I promise to pay" and is signed by two or more persons is their joint and several noteBills of Exchange Act, s. 179
- A note is incomplete until it is delivered to the payee or bearer; when no place of payment is specified, presentment for payment is not needed to make the maker liableBills of Exchange Act, s. 178 and 183 (3)
- A note given for a consumer purchase (credit from the seller, or from a lender not at arm's length with the seller) must be marked "Consumer Purchase" prominently on its face before or when it is signed; unmarked, it is void except in the hands of a holder in due course without noticeBills of Exchange Act, s. 190
- When a written contract states interest only at a rate per day, week, month or other period under a year, no more than 5% a year can be charged unless the contract also states the equivalent yearly rate; interest paid in breach can be recoveredInterest Act, s. 4 and 5
- Any rate of interest the parties agree on may be charged unless an Act of Parliament says otherwise; where interest is payable but no rate is fixed, the rate is 5% a yearInterest Act, s. 2 and 3
- Agreeing to receive, or receiving, interest at an annual percentage rate over 35% on the credit advanced is a criminal offence; interest includes every fee, fine, penalty and commission paid for the creditCriminal Code, s. 347 (1), (2)
A promissory note in Canada is governed by the federal Bills of Exchange Act: an unconditional, signed promise to pay a fixed sum on demand or at a set time. The Interest Act requires the rate as a yearly rate (or interest is capped at 5%), and the Criminal Code makes interest above 35% a year a crime. Your province decides how long you have to sue on the note.
What makes it a promissory note
The promise must be unconditional, in writing, signed by the borrower, for a sum certain, and payable on demand or at a fixed or determinable time. When two or more borrowers sign a note saying "I promise to pay", each owes the whole. The note takes effect once delivered to the lender.
Interest
Any agreed rate is allowed, up to the criminal rate, but write it as a rate per year: a note that states only a monthly rate is capped at 5% a year. If interest is payable and no rate is set, it is 5% a year. Above 35% a year, counting every fee as interest, is an offence.
Consumer purchases
A note that pays for goods or services a consumer buys on credit from the seller, or from a lender tied to the seller, must say "Consumer Purchase" on its face, or it is void against the buyer.
Common mistakes
- "2% a month" with no yearly rate: interest is capped at 5% a year.
- Fees that push the true rate over 35% a year.
- A seller-financed consumer note without the "Consumer Purchase" mark.
- A note signed by only one of two borrowers.
Sources
- Bills of Exchange Act, s. 176 (1), checked November 3, 2026
- Bills of Exchange Act, s. 179, checked November 3, 2026
- Bills of Exchange Act, s. 178 and 183 (3), checked November 3, 2026
- Bills of Exchange Act, s. 190, checked November 3, 2026
- Interest Act, s. 4 and 5, checked November 3, 2026
- Interest Act, s. 2 and 3, checked November 3, 2026
- Criminal Code, s. 347 (1), (2), checked November 3, 2026
Last reviewed November 3, 2026. Next review due February 3, 2027. This page explains published rules to help you write your report. It is not legal advice; the official text linked above governs. Provincial and territorial rules can add to these.
Promissory note rules by province
The key rule in each province or territory, linked to the official text. Each guide lists every rule with its sources, and each template is set up for that province or territory. Last reviewed November 3, 2026.
| Province or territory | Key rule | Official source |
|---|---|---|
| AlbertaTemplate | 2 years to sue, 10 years at most | Limitations Act, s. 3 (1) (a) |
| British ColumbiaTemplate | 2 years to sue from discovery, 15 years at most | Limitation Act, s. 6 (1) and 8 |
| ManitobaTemplate | 2 years to sue from discovery, 15 years at most | The Limitations Act, s. 6 and 7 |
| New BrunswickTemplate | 2 years to sue, 15 years at most | Limitation of Actions Act, s. 5 (1), (2) |
| Newfoundland and LabradorTemplate | 6 years to sue for a debt, 30 years at most | Limitations Act, s. 6 (1) (h) |
| Nova ScotiaTemplate | 2 years to sue from discovery, 15 years at most | Limitation of Actions Act, s. 8 (1), (2) |
| OntarioTemplate | 2 years to sue from discovery, 15 years at most | Limitations Act, 2002, s. 4 and 5 (1) |
Template preview
Questions
What goes in a promissory note?
A borrower's signed promise to repay a loan: the amount, the yearly interest rate, how and when it is repaid, and what happens on a missed payment, with the repayment schedule worked out to the cent and the rate checked against the Interest Act and the criminal interest rate. ReportDraft lays it out in 2 sections: promise to pay, other terms.
Do my province or territory's rules change the document?
Pick your province or territory when you start. Where we have checked a local requirement against official sources, it is added to your completeness list with a link to the source.
Can I change the wording?
Yes. The standard wording is a starting point: edit any sentence before you sign. The figures and dates are worked out again from your entries every time.
What do I get at the end?
A signed, locked PDF for your client and an editable Word file, both with your company details. Signed reports keep a fingerprint so later changes are visible.
Is a promissory note legally binding in Canada?
Yes, if it is an unconditional written promise, signed by the borrower, to pay a sum certain on demand or at a fixed or determinable time, as the Bills of Exchange Act defines it.
What is the maximum interest rate on a private loan in Canada?
The Criminal Code makes interest above 35% a year, counting all fees and charges, a crime. The rate must also be stated as a yearly rate, or the Interest Act caps it at 5%.
What if a promissory note does not state an interest rate?
If interest is payable and no rate is fixed, the Interest Act sets it at 5% a year.
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