How to Write a Loan Note (IOU) in Hong Kong — and How to Sue Without One

Lending money to someone you know usually starts with a bit of awkwardness about putting anything in writing — after all, they're a friend or a relative, and writing it down too formally can feel like you don't trust them. The trouble is that by the time you actually need to recover the money, that's exactly when you discover you have nothing to show for it. This article draws on the Hong Kong Inland Revenue Department, the Money Lenders Ordinance (Cap. 163), and CLIC — the Community Legal Information Centre to walk through what a loan note needs to hold up, whether stamping or witnessing is actually required, the interest ceiling that applies, and — if you never wrote anything down at all — whether you can still recover the money.

What a Loan Note That Holds Up Actually Needs

Many people think a "loan note" just needs a line saying "I owe you money" and a signature. In practice, a note that actually helps you is one you can hand straight to a Small Claims Tribunal Adjudicator as evidence, without needing to patch it together with anything else afterwards.

What should a loan note include?

Every one of the following matters:

• Both parties' full legal names — ideally matching the name on each person's HKID, so there's no room later for "that wasn't me"
• HKID or passport numbers — this makes it easier to name the correct defendant on Form 1 and Form 2 later, and reduces room for denial
• The exact amount, in Hong Kong dollars — written in both figures and words, e.g. "HK$50,000 (fifty thousand dollars)", to avoid any later dispute
• The date and method of advance — when, and how, the money was handed over: bank transfer, FPS, or cash — written clearly so it lines up with your bank records
• The repayment date or schedule — a lump sum or instalments, with amounts and dates
• Interest, if any — expressed as an annual percentage rate, never something vague like "interest as agreed" (see "Charging Interest" below)
• Both parties' signatures and the date — the borrower must sign; the lender signing too makes the record more complete
• A witness's signature, if you have one — not required, but genuinely useful; see the next section

Is the borrower a company rather than an individual? Then write the company's registered name and Business Registration / Companies Registry number rather than a personal name, and make clear that whoever signs is signing on the company's behalf (e.g. "signed for and on behalf of XX Limited") — otherwise you may end up chasing the wrong defendant (see "Lending to a Company Versus an Individual" below).

Loan Note Template

Here is a simple template you can adapt to your situation:

Loan Note

I, the Borrower, [borrower's full name] (HKID: [XXXXXXX]), acknowledge that on [date advanced], I borrowed HK$[amount, in words and figures] from [lender's full name] (HKID: [XXXXXXX]).

I undertake to repay the above amount in full by [repayment date / repayment schedule][, together with interest calculated at an annual rate of [X]%, if applicable].

Should I fail to repay by the above deadline, [lender's name] is entitled to take all lawful steps to recover the amount owed.

Borrower's signature: ______________________ Date: ______________

Lender's signature: ______________________ Date: ______________

Witness's signature (if any): ______________________ Date: ______________

Once it's written, both sides should keep a copy, and you should hold onto the transfer record too (a bank transaction slip or an FPS screenshot) — together with the note, that combination makes for far more complete evidence later.

Does a Loan Note Need to Be Stamped or Witnessed by a Lawyer to Be Valid?

This is the question most people get wrong first.

Does a loan note need stamp duty or a lawyer's witnessing to be legally valid?

No. According to the IRD's stamp duty page, the categories of documents chargeable with stamp duty are mainly leases, property transfers, Hong Kong stock transfers, and certain Islamic bond instruments — a private loan note between individuals is not among them, so stamp duty is not normally payable on the note itself. Likewise, a loan note doesn't need to be witnessed or notarised by a lawyer to have legal effect: as long as the content is clear, both parties sign voluntarily, and money was actually advanced, the note is already legally binding.

That said, "not required" doesn't mean "not worth doing." A witness isn't a legal requirement, but in practice, if a third party was present when the note was signed, their testimony can be a valuable backup if the other side later denies signing it at all. For a larger loan, having someone both sides trust witness the signing is worth considering as extra protection — but skipping it does not make the note invalid.

Charging Interest: What the Money Lenders Ordinance Caps

If the loan is being repaid with interest, how you word that clause matters more than most people expect.

Is there a limit on how much interest you can charge on a private loan?

Yes. Even a one-off loan to a relative or friend — not made in the course of carrying on a money-lending business — does not require a money lender's licence, but the interest rate provisions of the Money Lenders Ordinance (Cap. 163) still apply. According to CLIC, charging interest above 48% per annum is a criminal offence; a rate between 36% and 48% per annum is presumed to be an extortionate transaction, meaning the court can refuse to enforce it — so filing a claim might not get you the interest, and could even put the principal itself in dispute. This ceiling was itself lowered on 30 December 2022, from 60% (extortionate threshold 48%) down to the current 48% (extortionate threshold 36%) — make sure you're working from the current figures, not the old ones.

Practical advice: rather than setting a rate close to the ceiling out of greed, set a modest, clearly stated annual rate instead — something like 5% to 10%. The reasoning is simple: the closer your rate sits to (or above) the cap, the more likely the other side can argue "extortionate transaction" later, which risks dragging the principal down with it. If this is simply an interest-free loan between friends, writing "no interest charged" on the note is the safest approach of all.

Lending to a Company Versus an Individual

If the borrower is a limited company rather than a natural person, your approach to recovery needs a slight adjustment.

What should you watch for when recovering money owed by a company?

First, the loan note needs to clearly state which company the money was lent to — its correct full registered name and Business Registration / Companies Registry number — and be signed by someone authorised to sign on the company's behalf. If only a "shareholder" or "manager" signs in a personal capacity, you may end up with a dispute later over whether the company or that individual actually owes the money. Second, when recovering from a company, the defendant named should be the company's correct registered name, not the boss's personal name (unless that individual separately signed a personal guarantee). It's also worth watching whether the company might close down or enter liquidation while you're pursuing recovery — once liquidation proceedings start, an ordinary creditor's recovery is restricted and you generally have to prove your debt through the liquidation process instead, so if you suspect something is wrong with the company, it's worth acting sooner rather than later.

No Loan Note At All? Can You Still Prove the Debt?

Plenty of people never wrote anything down to begin with — just an "OK, I'll pay you back later" and the money was transferred. Having no note doesn't mean you can't recover it, but you'll need to work harder on the evidence.

With no written loan note, how do you prove the other side actually owes you money?

Hong Kong law recognises oral loan agreements — the key is whether you can prove the loan and its amount actually existed. The fewer of the following you're missing, the stronger your case:

• Bank transfer or FPS records — proving the money genuinely moved from your account to theirs, with a clear date and amount
• WhatsApp or other message records — the other side confirming the amount, or promising to repay — even something as simple as "thanks for lending me that" can serve as supporting evidence
• A pattern of partial repayments — if the other side has repaid part of the amount, that pattern itself indirectly proves a loan relationship existed
• A witness — usable, but harder to rely on in practice than written records, and generally works best as a supplement

If you're only thinking about documenting it now, is it too late?

It's not too late — and the sooner you act, the better. Even if you've never written anything down before, you can still take the initiative: send a WhatsApp message that objectively states the amount and date, and ask the other side to confirm it — or simply ask them to sign a short acknowledgement of debt now, confirming they still owe you a given amount. Doing this doesn't just immediately strengthen the evidence you already have; a written acknowledgement from the other side may also restart how the limitation period for recovery is calculated (for a full explanation of limitation periods, see Debt Recovery in Hong Kong: What You Need to Know Before You Start).

Once you've organised that evidence into a clear timeline, if the other side keeps ignoring you or refuses to confirm anything, consider sending a formal demand letter first to force a response; if they still don't respond, and the amount is HK$75,000 or below, you can file a claim at the Small Claims Tribunal. Before filing, it's worth taking the time to work through our guide to preparing evidence and pull your transfer records, message screenshots and (if you have one) loan note into one complete evidence bundle; if you'd like company through the process, you can also see what our practical loan-recovery case guide actually covers.