Arkansas Promissory Note
Arkansas promissory note template with the 17% usury cap and 5-year statute of limitations under Arkansas law. Free template. Attorney review available.
Introduction
Arkansas voters rewrote the state's usury law by ballot amendment in 2010, and the result is unusually strict: Amendment 89 to the Arkansas Constitution caps interest on an ordinary loan or promissory note at a flat 17% per annum, with no separate, lower rate for personal or family loans the way some states set. Charge more than that, and Arkansas doesn't just strip out the excess interest the way many states do; the entire contract is void as to both principal and interest. A promissory note is a written, signed promise by one party, the maker, to pay a definite sum of money to another party, the payee, either on demand or by a set date, and it's the paper trail that makes a loan enforceable, whether it's a loan between family members, a small business loan, or a loan to an LLC. An Arkansas promissory note doesn't need to be notarized or witnessed to be enforceable. Confession-of-judgment clauses are not flatly banned in Arkansas, but state law only lets a debtor confess judgment by personally appearing in court with the creditor's consent, so a pre-signed clause in the note itself cannot substitute for that. You generally have 5 years from a missed payment or the note's due date to sue to collect, and that deadline is tolled by a partial payment or a written acknowledgment of the debt.
Key Things to Know
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A promissory note is a written, signed promise by one party (the maker) to pay a definite sum of money to another party (the payee), either on demand or by a set date.
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Arkansas caps interest at a flat 17% per annum on an ordinary loan or promissory note, with no separate lower rate for personal or household loans. A different rule applies to loans by federally insured banks, and governmental bonds and loans have no constitutional cap. (Ark. Const. Amend. 89, Section 3)
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If a note under the general 17% cap charges more than that, the entire contract is void as to both principal and interest, not just the excess interest, and the Arkansas Constitution directs the General Assembly to prohibit such contracts by law. (Ark. Const. Amend. 89, Section 6)
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An Arkansas promissory note does not need to be notarized or witnessed to be enforceable. Arkansas Code Section 4-3-104, which lists what makes a note a valid negotiable instrument (an unconditional promise, a fixed amount, a signature, payable on demand or by a definite date), does not include notarization or witnessing.
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Arkansas does not flatly ban confession-of-judgment clauses (a clause letting the payee get a court judgment without a full lawsuit), but state law only allows a debtor to confess judgment by personally appearing in a court of competent jurisdiction and, with the creditor's assent, confessing judgment there. A boilerplate clause in the note by itself does not satisfy this requirement. (Ark. Code Section 16-65-301)
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You generally have 5 years from a missed payment or the note's stated due date to sue to collect on a written promissory note in Arkansas. A partial payment or a written acknowledgment of default tolls (pauses and restarts) this deadline. (Ark. Code Section 16-56-111)
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If an Arkansas promissory note is secured by personal property, the lender generally needs to file a UCC-1 financing statement to perfect its security interest and protect its priority against other creditors. (Ark. Code Section 4-9-310) Promissory notes are commonly used in Arkansas for both family loans and business or LLC loans, and the same 17% cap applies either way.
Key decisions before you file
Before you file a Promissory Note in Arkansas, a few decisions shape the document: which option to choose and what each one means. The Promissory Note guide walks through them.
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Arkansas Requirements for Promissory Note
Arkansas caps interest at a flat 17% per annum for an ordinary loan or promissory note, with no separate lower rate for personal or household loans. A different rule applies to loans by federally insured depository institutions, and governmental bonds and loans made by or to governmental units have no constitutional cap.
To be a valid negotiable instrument, a note must be an unconditional promise to pay a fixed amount, signed by the maker, and payable on demand or at a definite time.
Generally 5 years from a missed payment or the note's stated due date to sue to collect on a written promissory note. A partial payment or a written acknowledgment of default tolls (pauses and restarts) this deadline.
If a note is secured by personal property, the lender generally must file a UCC-1 financing statement to perfect and prioritize its security interest against other creditors.
A note charging more than the flat 17% usury cap is void as to both principal and interest, not just the excess interest, a notably harsher rule than a typical forfeit-the-interest-only usury penalty. The Arkansas Constitution directs the General Assembly to prohibit such contracts by law.
Arkansas does not flatly ban confession-of-judgment clauses, but a debtor can confess judgment only by personally appearing in a court of competent jurisdiction, with the creditor's assent, at the time judgment is entered. A pre-signed clause in a note cannot by itself create a valid confession of judgment.
Arkansas does not require a promissory note to be notarized or witnessed to be enforceable. Arkansas Code Section 4-3-104's list of what makes a note a valid negotiable instrument does not include notarization or witnessing; notarization is optional and used only for evidentiary purposes.
Arkansas Fair Mortgage Lending Act licensing applies only to a person "engaged in the business of" making or arranging mortgage loans for compensation or other gain. An isolated private person-to-person promissory note, even if secured by real property, does not by itself trigger this licensing requirement.
Frequently Asked Questions
Arkansas caps interest at a flat 17% per annum on an ordinary loan or promissory note, with no separate lower rate for personal or household loans (Ark. Const. Amend. 89, Section 3). A different rule applies to loans by federally insured banks, and governmental bonds and loans have no constitutional cap.
No. Arkansas Code Section 4-3-104 lists what makes a note a valid, enforceable negotiable instrument, and notarization isn't one of the requirements. Notarizing a note is optional and can help as evidence of who signed it, but it doesn't affect enforceability.
Include the principal amount, the interest rate (at or under Arkansas's flat 17% usury cap), the repayment schedule, what counts as default, and the signatures of the maker and payee. Since a confession-of-judgment clause can't be validly pre-signed under Arkansas law, don't rely on one; the note relies on a regular lawsuit for enforcement if the maker defaults, unless the maker later chooses to appear in court and confess judgment.
Yes, as long as it meets the basic requirements of a valid contract and, if it's meant to be a negotiable instrument, the elements in Arkansas Code Section 4-3-104: an unconditional promise to pay a fixed amount, a signature, and payment on demand or by a definite date. It doesn't need to be notarized to be enforceable.
An unsecured note relies only on the maker's promise to pay. A secured note is backed by collateral, and if it's secured by personal property rather than real estate, the lender generally needs to file a UCC-1 financing statement to protect its priority against other creditors (Ark. Code Section 4-9-310).
The payee can declare the remaining balance immediately due (if the note includes an acceleration clause) and can sue to collect. Arkansas law only lets a debtor confess judgment by personally appearing in court with the creditor's consent, so a pre-signed confession-of-judgment clause in the note cannot by itself let the payee skip a lawsuit.
Generally 5 years from a missed payment or the note's stated due date, under Arkansas's statute of limitations for written obligations (Ark. Code Section 16-56-111). That deadline is tolled (paused and restarted) by a partial payment or a written acknowledgment of default. Waiting too long can mean losing the right to sue on the note.
Yes. Promissory notes are commonly used in Arkansas for both family loans and business or LLC loans, and the same flat 17% usury cap applies to either kind of loan, with no separate personal-use rate the way some states set.