Iowa Promissory Note
Iowa promissory note template built around the state's monthly-set usury ceiling and 10-year statute of limitations. Free template. Attorney review available.
Introduction
Iowa does not fix its usury ceiling at one percentage the way most states do. Iowa Code Section 535.2 has the state's Superintendent of Banking recalculate the maximum lawful rate every month, 2 points above the prior two months' average yield on 10-year Treasury notes; the published rate for August 2026 is 6.5%, and next month's figure will differ. Absent a written rate, the default is a flat 5% per year. Business, agricultural, and real-property-purchase loans, plus personal loans above a federal disclosure threshold, are exempt from any ceiling at all. A promissory note itself is a written, signed promise by one party, the maker, to pay a definite sum to another, the payee, on demand or by a set date, making a family or business loan enforceable if the maker doesn't pay. An Iowa note doesn't need to be notarized or witnessed to be enforceable. Confession-of-judgment clauses are legal only after a default actually happens: Iowa Code Section 537.3306 voids a confession authorization signed at origination on an ordinary personal loan, and voids any confession attempted outside Chapter 676's signed-and-verified-statement process. You generally have 10 years, longer than most states, from a missed payment or the note's due date to sue to collect.
Key Things to Know
- 1
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.
- 2
Iowa does not fix the usury ceiling at one percentage. For a written agreement, the maximum lawful rate is 2 percentage points above the monthly average 10-year U.S. Treasury constant maturity rate, recalculated and published every month by the Iowa Superintendent of Banking (for example, 6.5% for August 2026). If no rate is agreed in writing, the default rate is 5% per year. (Iowa Code Section 535.2)
- 3
Several categories of loan are exempt from Iowa's usury ceiling entirely, meaning the parties can agree in writing to any rate: loans to buy real property, business or agricultural purpose loans, loans for real-property construction improvements above a statutory threshold, corporate borrowers, and personal or family loans above the federal "threshold amount" that Regulation Z adjusts annually. (Iowa Code Section 535.2, subsection 2)
- 4
An Iowa promissory note does not need to be notarized or witnessed to be enforceable. Iowa Code Section 554.3104 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), and notarization isn't one of the requirements.
- 5
Confession-of-judgment clauses, which would let the payee obtain a court judgment against the maker without a full lawsuit, are legal in Iowa only after a default has already happened. Iowa Code Section 537.3306 voids a confession authorization signed before default on an ordinary loan, and Iowa Code Chapter 676 requires the maker to sign and verify a written statement, filed with the district court clerk, before the clerk enters judgment.
- 6
You generally have 10 years from a missed payment or the note's stated due date to sue to collect on a written promissory note in Iowa, longer than the limitations period in many other states. (Iowa Code Section 614.1, subsection 5)
- 7
If an Iowa promissory note is secured by personal property rather than real property, the lender generally needs to file a UCC-1 financing statement with the Iowa Secretary of State to protect its priority against other creditors. (Iowa Code Section 554.9310)
Key decisions before you file
Before you file a Promissory Note in Iowa, 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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Iowa Requirements for Promissory Note
Iowa does not require a promissory note to be notarized or witnessed to be enforceable; notarization is optional and used only for evidentiary purposes.
for a written agreement, 2 percentage points above the monthly average 10-year U.S. Treasury constant maturity rate, recalculated and published monthly by the Iowa Superintendent of Banking; the default rate absent a written rate is 5% per annum. Several loan categories (business, agricultural, real-property-purchase, corporate borrowers, and personal/family loans above the federal Regulation Z threshold amount) are exempt from the ceiling entirely.
a lender who charges above the lawful rate forfeits 8% per annum on the unpaid principal at judgment, paid to the state treasurer, not the borrower; the lender's judgment is also capped at the principal sum if unlawful interest was charged.
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 10 years from a missed payment or the note's stated due date to sue to collect on a written promissory note.
if a note is secured by personal property, the lender generally must file a UCC-1 financing statement with the Iowa Secretary of State to perfect and prioritize its security interest.
confession of judgment is legal in Iowa only after a default has already happened. Section 537.3306 voids a pre-default confession authorization on an ordinary loan, and Chapter 676 requires the defendant to sign and verify a written statement, filed with the district court clerk, before judgment is entered.
Chapter 537's licensing and disclosure rules apply only to a "consumer loan," a loan made by a lender regularly engaged in the business of lending, to a natural person, primarily for personal/family/household use, payable in installments or carrying a finance charge, and not exceeding the federal Regulation Z "threshold amount." An isolated private person-to-person note falls outside this scope.
Frequently Asked Questions
Iowa doesn't set one fixed percentage. For a written agreement, the ceiling is 2 percentage points above the monthly average 10-year U.S. Treasury constant maturity rate, recalculated and published every month by the Iowa Superintendent of Banking (for example, 6.5% for August 2026). If no rate is agreed in writing, the default rate is 5% per year. Several categories of loan, including business, agricultural, and real-estate-purchase loans, and personal loans above a federal disclosure threshold, are exempt from any ceiling at all.
No. Iowa Code Section 554.3104 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 (checked against that month's published usury ceiling or an applicable exemption), the repayment schedule, what counts as default, and the signatures of the maker and payee. If you want to reference a confession-of-judgment option, remember Iowa Code Section 537.3306 voids one signed before a default happens; a valid confession requires the maker's own signed and verified statement under Chapter 676 after the default actually occurs.
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 Iowa Code Section 554.3104: 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 with the Iowa Secretary of State to protect its priority against other creditors.
The payee can declare the remaining balance immediately due (if the note includes an acceleration clause) and can sue to collect. If the note references a confession-of-judgment authorization, that authorization is void unless it's signed after the default has already happened; even then, the maker must sign and verify a separate statement under Iowa Code Chapter 676 before the district court clerk will enter judgment without a full lawsuit.
Generally 10 years from a missed payment or the note's stated due date, under Iowa's statute of limitations for actions founded on a written contract (Iowa Code Section 614.1, subsection 5). That's longer than the window in many other states. Waiting too long can mean losing the right to sue on the note.
Yes. Promissory notes are commonly used for both family loans and business or LLC loans in Iowa. Business and agricultural loans are exempt from Iowa's usury ceiling entirely, so those notes can carry any agreed rate, while an ordinary personal or family loan below the federal disclosure threshold generally stays subject to the monthly-published ceiling unless another exemption applies.