Arkansas Secured Promissory Note Overview
A secured promissory note in Arkansas is a loan agreement where the borrower pledges specific collateral to guarantee repayment. Arkansas law governs the creation, perfection, and enforcement of security interests under the Uniform Commercial Code (UCC) as adopted by the state. The maximum interest rate for most loans in Arkansas is 17% (5% above Fed discount rate).
Maximum 17% per annum or 5% above the Federal Reserve discount rate, whichever is less; constitutional cap. Lenders should verify that the agreed-upon interest rate complies with Arkansas's usury laws before finalizing the note. Charging interest above the legal limit can result in severe penalties, including forfeiture of interest and potential civil liability.
For secured notes involving real property in Arkansas, judicial and non-judicial (statutory foreclosure) foreclosure applies. Understanding your state's foreclosure process is critical because it determines the timeline, costs, and lender's rights in the event of borrower default.
17% (5% above Fed discount rate)
Usury rate cap
Secretary of State
UCC filing office
Judicial and non-judicial
Foreclosure type
Yes
Deficiency judgment
Arkansas Legal Requirements
Arkansas has specific requirements for secured promissory notes. Here's what you need to ensure your note is enforceable under AR law:
Important: Arkansas Usury Laws
Arkansas's maximum interest rate is 17% (5% above Fed discount rate). Maximum 17% per annum or 5% above the Federal Reserve discount rate, whichever is less; constitutional cap. Exceeding the legal limit may void the interest portion of your note or result in civil penalties.
Essential Elements
- Written Agreement: The note must be in writing, signed by the borrower, and clearly state the loan terms
- Compliant Interest Rate: Must not exceed Arkansas's 17% (5% above Fed discount rate) usury cap
- Collateral Description: Specific, identifiable description of all pledged property
- Security Agreement: Grant of security interest signed by the borrower (debtor)
- UCC-1 Filing: Filed with the Secretary of State, UCC Division for personal property collateral
- Default Provisions: Clear events of default, cure periods, and remedies including foreclosure/repossession rights
UCC Filing in Arkansas
To perfect a security interest in personal property in Arkansas, the lender must file a UCC-1 financing statement with the Secretary of State, UCC Division. This public filing puts other creditors on notice and establishes the lender's priority in the collateral.
Prepare the UCC-1 Form
Include the debtor's exact legal name, secured party name, and detailed collateral description
File with the Secretary of State
Submit online or by mail with the required filing fee
Monitor and Renew
UCC-1 filings last 5 years; file a continuation statement before expiration
Terminate After Payoff
File a UCC-3 termination statement when the loan is fully repaid
Arkansas Foreclosure & Repossession
Arkansas uses judicial and non-judicial (statutory foreclosure) foreclosure for real property collateral. For personal property (vehicles, equipment, inventory), the lender generally has the right to repossess the collateral without court action, provided it can be done without breaching the peace.
Regarding deficiency judgments in Arkansas: Yes. The lender must follow Arkansas's specific procedures for disposing of collateral in a commercially reasonable manner, providing proper notice to the borrower before any sale.
| Aspect | Arkansas Rule |
|---|---|
| Foreclosure Type | Judicial and non-judicial (statutory foreclosure) |
| Deficiency Judgment | Yes |
| Statute of Limitations | 5 years (oral and written contracts) |
| Usury Rate | 17% (5% above Fed discount rate) |
| UCC Filing Office | Secretary of State, UCC Division |
Sample Arkansas Secured Promissory Note
Below is a preview of our Arkansas-specific secured promissory note. Your customized document will include all terms compliant with AR law.
STATE OF ARKANSAS
SECURED PROMISSORY NOTE
Collateral-Backed Loan Agreement
LENDER (Secured Party):
Name: [Lender Name]
Address: [Arkansas Address]
BORROWER (Debtor):
Name: [Borrower Name]
Address: [Arkansas Address]
LOAN TERMS
Principal: $[Amount]
Interest: [Rate]% per annum (max 17% (5% above Fed discount rate) in AR)
Collateral: [Description]
Arkansas Secured Promissory Note FAQ
Answers to common questions about secured promissory notes, UCC filings, and collateral requirements in Arkansas.
Official Arkansas Resources
Use these official resources to verify Arkansas requirements, file UCC documents, and access state legal information.
Other Arkansas Promissory Note Types
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