Arkansas Promissory Note Template [PDF + Download]

A promissory note in Arkansas is a written legal document in which the borrower promises to repay borrowed money under the terms stated in the agreement.

This document helps formalize loan agreements in Arkansas by documenting the arrangement between the lender and borrower, including all relevant terms, such as the loan amount, payment methods, and interest rates.

Now, let's explore a more detailed explanation of the meaning of promissory note and its functions so you can better understand when and how to use it effectively.

Types of Promissory Notes in Arkansas

Arkansas has two main types of promissory notes—secured and unsecured. The distinction lies in whether or not the loan is backed by collateral to ensure repayment.

Types of Promissory Notes

#1. Secured Promissory Note

A secured promissory note provides additional assurance to the lender by requiring the borrower to offer collateral—an asset of equal or greater value than the loan amount. So, if the borrower fails to repay the loan by the due date, the lender can claim the collateral to recover the loss.

Once the collateral is sold, any extra money left after the debt is satisfied must be returned to the borrower. This arrangement helps reduce the lender's risk by providing a clear path to recovery.

#2. Unsecured Promissory Note

On the other hand, an unsecured promissory note does not involve collateral. The lender relies solely on the borrower's promise to repay. While this type of note is still legally binding, the lender may face greater risk since they cannot claim any specific asset if the borrower defaults.

Signing Requirements for Promissory Notes in Arkansas

Signing requirements for a promissory note in Arkansas include legal conditions that must be met for an Arkansas debt agreement to be legally enforceable.

Most available promissory note templates already include the essential elements, but let's take a closer look at what these are:

Signing Requirements

The document must be in writing.
It should clearly identify the borrower and the lender.
All key terms of the debt must be stated, including the loan amount, payment methods, due date, and interest rate.
Both parties must sign the document.

While a promissory note is legally binding with just the signatures, adding a witness or having it notarized provides additional legal security. Notarization verifies the authenticity of the signature, helping to prevent potential disputes in the future. Additionally, parties should review a promissory note sample to ensure all details are correctly included and understood.

Statutory Considerations for Arkansas Promissory Notes

The requirements for the promissory note in Arkansas are stated in Chapter 57 of the Arkansas Code of 1987 and the Arkansas Constitution, Amendment 89. The following table will help break down these requirements in relation to interest rate limits.

Provision	Details
Interest Rate Agreement	Parties can agree to an interest rate in writing for loans, but it must comply with the interest rate prescribed in Amendment 89 of the Arkansas Constitution.
Maximum Interest for Other Loans	The maximum interest rate for other loans is capped at 17% per year.
Unspecified Interest Rate	If no interest rates are specified in the agreement, the default interest rate is set at 6% per year.

These provisions apply to both personal and business loans, ensuring the validity of the promissory note in Arkansas while protecting borrowers from excessive interest rates.

How to Enforce a Promissory Note in Arkansas

To enforce a promissory note in Arkansas, the lender must take specific steps if a borrower defaults. The first step is to send a formal demand letter outlining the missed payments and requesting immediate repayment. This can sometimes resolve the issue without legal action.

If the borrower still doesn’t repay, the lender can file a claim in Arkansas small claims court for debts up to $5,000. For higher amounts, the case must be taken to a higher court.

To strengthen the claim and ensure it becomes an enforceable promissory note in Arkansas, the lender should present the note itself, evidence of the default, and any relevant communications, such as payment reminders, notices of default, or demand letters. If the court rules in favor of the lender, it can assist with enforcement through wage garnishment or another collection method.

How Can a Promissory Note in Arkansas Be Changed or Revoked?

A promissory note in Arkansas can be changed or revoked if both parties—the lender and the borrower—mutually agree to the modification. For example, they might agree to adjust the repayment terms, reduce the loan amount, or cancel the debt entirely.

To make these changes valid, it’s essential to document them in writing and sign the amended document. This ensures there’s a clear record of the updated repayment agreement in Arkansas, preventing disputes in the future. Without a written and signed amendment, the original terms of the promissory note in Arkansas remain in effect.