An IOU template, short for I Owe You, is a written note that shows who borrowed money and how much. It is a legally binding document that records the debt owed by one person to another. It is not as formal a document as a promissory note, but it is still a legally binding document. Friends, family members and business partners often use one when they already trust each other.
Last Updated: October 2026. This guide is reviewed and updated regularly to reflect current law. If you notice an error or outdated information, please contact us.
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An IOU or an I Owe Youis a legally binding document that serves as an acknowledgment of debt between two parties. It is a relatively informal document compared to a promissory note or loan agreement but can still be used to establish a legally binding relationship between the lending party and the borrowing party.
People who don’t necessarily have a formal relationship, including friends and family, can use an IOU as a form of documentation or acknowledgment of debt.
When Should You Use an IOU?
An IOU is a good fit when you want a written record of a loan without drafting a full contract, because it lists the amount borrowed and the repayment terms, so both people can check the same information later. It works like a less formal loan contract that states the amount a borrower owes to another person.
You lend or borrow a small amount of money and want a written record.
You borrow money for an event.
You cannot pay for an item in full, so you give an IOU to the other party for the balance.
You have used an IOU with the same person before.
IOUs create a legal relationship between the two people involved and should be signed by the borrower and the lender. In some cases, the lending party and the borrowing party may also include a witness or a guarantor in the IOU form. In that case, the signatures of the witness or the guarantor are also required. Once the form is signed, it creates a legal relationship between everyone involved.
Loan Agreement vs. IOU
Both a loan agreement and an IOU acknowledge a debt, but they usually serve different situations. A loan contract is a much more detailed and formal document and is used when you want to borrow a substantial amount of money.
It forms part of a more formal commercial transaction when a huge amount may be borrowed to buy a house or a car. A loan agreement template also contains more details regarding the terms of the transaction as compared to an IOU.
Promissory Note vs. IOU
Promissory notes are also another way to make an acknowledgment of debt. They are a more formal document as compared to IOUs and contain more details regarding the terms of repayment and consequences of non-payment. It is also difficult to enforce an IOU in court unless it has been notarized. An IOU is usually a non-negotiable document and cannot be transferred from one person to another.
What Should an IOU Include?
The details in an IOU template can vary from case to case. It is wise to include the following basic information in your IOU to protect the interests of the lender and the borrower:
Debtor: It is important that the IOU mentions the full name of the debtor or the borrower and establishes a promise to pay back the money to the lender. The promise to pay is a fundamental ingredient of an IOU form and creates a legal relationship between the lender and the borrower.
Creditor: The form should also include the full name of the creditor or lender. The promise to pay along with the contacts of the parties forms an acknowledgment of debt between the lender and the borrower.
Loan amount: The form should specify the exact amount which has been given as a loan by the creditor to the debtor. The amount owed by the borrower to the lender should be clearly mentioned in words as well as in numbers.
Interest rate: The form should also specify the interest rate, if any, applicable to the principal amount. The borrower is bound to pay back the principal amount along with the interest as mentioned in the IOU form.
Late fees: It is up to the parties to include a late fees clause in the IOU form in case there is a delay in payment or default. This late fee can cover the expenses the lender may have to incur due to the delay in payment.
Repayment terms: Like a loan contract or agreement, an IOU form can also contain repayment terms to maintain clarity between the parties. The parties can choose the amount of money and the time interval for each payment. For instance, the parties can choose between monthly, weekly, and quarterly payments.
Maturity date: The maturity date or the due date is the day on which the entire principal amount along with the interest becomes due and payable. The borrower is required to pay the entire amount on or before the day of maturity.
Tip: Write down the date, the amount and the repayment plan on the day you lend or borrow, and keep a signed copy for the borrower and the lender.
How to Fill Out the IOU (I Owe You) Template
The steps below follow FormsPal’s IOU template, the PDF you can download at the top of this page. Each step matches one part of the form, so you can work from the top of page 1 to the bottom of page 2. Open the downloaded PDF in the PDF editor to type your answers on screen, or print it and write by hand.
The screenshots under each step show the FormsPal IOU (I Owe You) template filled with sample entries in blue, so you can see where each answer goes. The names, addresses, dates and amounts are examples only.
IOU Form: parties, maturity date, amount and interest. In the opening paragraph, type the borrower’s full name before the word “Debtor” and the lender’s full name before the word “Creditor”. Next, enter the due date in the blank before “Maturity Date”. Write the principal amount in words, then in numbers. Enter the interest rate in the blank before “% per annum”.Step 1: sample entries, not a real document.
Payment schedule. Tick the box that matches your plan: quarterly, monthly or weekly payments, no payments until the Maturity Date, or Other. For the first three, enter the payment amount in dollars. For Other, describe your plan on the Describe line. For example, if the borrower pays $100 a month, tick the monthly box and enter 100 in its blank.Step 2: sample entries, not a real document.
Guarantor. If someone guarantees the IOU, tick the first box and enter that person’s full name before the word “Guarantor”.Step 3: sample entries, not a real document.
No guarantor and Additional Terms and Conditions. If there is no guarantor, tick the no-guarantor box instead. Then write any extra terms on the Additional Terms and Conditions lines at the bottom of page 1.Step 4: sample entries, not a real document.
Governing law and the Debtor and Creditor signatures. Mention the governing law at the beginning of the second page of the document. Fill in the name of the state whose laws will govern the IOU form in the first blank space provided at the beginning of the second page. Once all of the information has been added, the debtor and creditor must sign the form and mention the month, day, and year in which the form is signed. The debtor’s and the creditor’s signature and print name must be affixed in the corresponding blank spaces provided towards the end of the IOU form.Step 5: sample entries, not a real document.
If this IOU Form has a Guarantor. If there is a guarantor, his or her signature and print name should also be filled in at the end of the IOU form. The guarantor also adds a date on the line beside the signature.Step 6: sample entries, not a real document.
You can download FormsPal’s easy-to-use IOU template for free.
Frequently Asked Questions
These short answers cover what people ask most when they write an IOU for the first time: what the term means, who can use one, how it differs from a promissory note and what to do after signing.
What does IOU stand for?
IOU stands for I Owe You, which is a short written acknowledgment that one person owes money to another person.
Can friends or family members use an IOU?
Yes, many people use an IOU template for a loan between friends or family members, and it helps to write down the amount, the due date and the repayment plan so both sides remember the same terms.
Is an IOU the same as a promissory note?
No, an IOU is the simpler document, while a promissory note adds more detail about repayment, so pick the one that fits the size of the loan.
What happens after both people sign the IOU?
When you sign the form, it will create an acknowledgment of debt and a legal relationship between everyone involved. Keep a signed copy for each person.
General information, not legal or tax advice.
Jennifer M. Settles
Author & Attorney
With over 25 years of experience as a business and transactional attorney, Jennifer has mastered the craft of closing highly successful deals for her clients. Through her wide-ranging expertise in commercial contracts, real estate transactions, M&A and corporate law, Jennifer secures results that are second-to-none.
