If you are going to borrow money from a friend or lend money to someone you know, be sure to document it in writing. Our personal loan agreement template can help. Here are some quick benefits:
For the Borrower
- Get the Loan. Provides greater leverage to the borrower when asking for a loan. If you have a loan agreement in hand for both parties to sign, this increases the chance of getting the loan.
- Avoid the IRS. Reduces taxable income risk. The IRS does consider loans as gifts if they are not paid back and, in some cases if interest isn’t charged.
For the Lender
- Get paid back. A written agreement provides a greater level of comfort to the lender that they will get paid back.
- Eliminate confusion. It’s easy to forget what has only been verbally agreed to. A written document keeps the arrangement clear.
