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Create a simple IOU form with our template to create the basis of an informal loan agreement. Ensure all the correct details when creating your form.
Last Update October 8th, 2025
Reviewed by Vicki Cook
Also Known As
Debt Acknowledgment Form
I Owe You
Informal Loan Agreement
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An IOU is an informal loan agreement between a lender and a borrower. It puts the debt in writing, and the person who borrows your money has a responsibility to pay it back [1].
An IOU is sometimes referred to as:
Many times, this document is used between 2 people with a previous relationship. Even though it is not considered formal, the agreement can be enforceable and used in court to collect on both personal loans and business loans you make.
An "I Owe You" shortened to “IOU,” states the amount of money borrowed and when it needs to be paid back by the borrower.
Using a simple IOU form to complete every type of agreement is not recommended. It is a much more informal type of loan agreement and shouldn’t be used for formal transactions.
However, an IOU is the best option in certain moments, for example:
Whether or not you use an IOU, depends on the relationship you have with the borrower. This document is often reserved for family members, friends, and coworkers.
If you enter a verbal agreement and do not use a written IOU agreement, you may have trouble getting your money back. This can cause strain in your relationship with the borrower as well as a legal dispute [1].
LawDistrict has templates of IOU forms in PDF available to help you write your agreement.
You can create your own IOU document with the help of our free printable IOU template.
Afterwards, follow these step-by-step instructions to know exactly what should be in an IOU letter, and review your document with an attorney:
Fill in the names of the people borrowing and loaning the money. Then include the amount of money being loaned. Add any interest in the amount that must be returned.
Write the name of the borrower and add that he or she will pay back the full amount. Include the choices of paying the loan back in partial ballon or full payments. If it is partial, mention the frequency of payments or include a full repayment schedule. Also, document any consequences for late payment [2].
Include a declaration that states both parties are bound to the agreement. Write the date the agreement is going to take place.
Write your name and the name of the borrower, and then sign the document. In addition, include the name and signature of any witness, including a notary public.
If you are planning to loan your money to someone who needs it, it is essential that you ensure you will get your money back.
There are different types of agreements and legal documents that can be used for this purpose.
Besides an IOU, more formal agreements include a Loan Agreement and a Promissory Note, which include a promise from a borrower to repay the loan in full [3].
Review the table below to better understand the 3 documents.
| IOU | Promissory Note | Loan Agreement |
|---|---|---|
| Includes only basic information such as names and loan amount | Ideal for paying over a longer period of time in single or installment payments | Includes the right to transfer the debt |
| Ideal for agreements between family and friends | Information about any collateral | It can be repaid in installments or balloon payments |
| It is the simplest to write | There are Secured and Unsecured Promissory Notes | Includes details about the consequences of defaulting. |
To give you a good idea of how to write the form, we have included a sample of the document below.
Then, use our free IOU template to help you fill out your form.
An IOU is not always simple to understand. That is why we’ve included answers to some of the most common questions about IOUs.
Answering these doubts, we intend to provide you with further information to make the writing process easier.
It can be more difficult to enforce this agreement due to its informality. Outlining all the names, the amount of the loan, and the statement of repayment obligations will make the IOU enforceable and a binding agreement.
Depending on the state, your IOU may need to be signed by a witness. Even if it is not required,it is a good idea to have your IOU form signed by a notary public as a legally binding document.
If the document is signed and includes important elements such as the amount owed and when it is due, the borrower will be legally required to pay that amount back.
