Arkansas Unsecured Promissory Note Overview
An unsecured promissory note in Arkansas is a loan agreement where the borrower promises to repay without pledging any collateral. The lender relies on the borrower's creditworthiness and the legally enforceable promise to pay. The maximum interest rate in Arkansas is 17%.
Maximum 17% per annum or 5% above the Federal Reserve discount rate; constitutional cap. Unsecured notes carry more risk for the lender, so interest rates are typically higher than secured notes. However, the rate must still comply with Arkansas's usury laws.
If the borrower defaults, the lender's primary remedy is filing a lawsuit within Arkansas's statute of limitations (5 years (oral and written)). The small claims court limit in Arkansas is $5,000, which is ideal for smaller unsecured loans.
17%
Usury rate cap
5 years
Statute of limitations
$5,000
Small claims limit
25%
Max garnishment
Arkansas Legal Requirements
Arkansas has specific requirements for unsecured promissory notes:
Important: Arkansas Usury Laws
Arkansas's maximum interest rate is 17%. Maximum 17% per annum or 5% above the Federal Reserve discount rate; constitutional cap. Exceeding this limit may void the interest or result in penalties.
- Written Agreement: Must be in writing, signed by borrower, clearly stating loan terms
- Compliant Interest Rate: Must not exceed Arkansas's 17% usury cap
- No Collateral Statement: Explicitly state that the note is unsecured with no collateral pledged
- Default Provisions: Events of default, cure period, acceleration clause, and collection remedies
- Personal Guarantee: Recommended for business borrowers to protect the lender
- Governing Law: Specify Arkansas law as the governing jurisdiction
Collection Remedies in Arkansas
If a borrower defaults on an unsecured promissory note in Arkansas, the lender has several collection options:
Send a Formal Demand Letter
Written notice demanding payment within a specified timeframe, creating a paper trail
File in Small Claims Court ($5,000 limit)
Fast, affordable, no attorney required for amounts within the limit
File a Civil Lawsuit
For amounts above small claims limits, file in Arkansas civil court
Enforce the Judgment
Up to 25% of disposable earnings; head of household exemption. Bank account levies and property liens also available
Statute of Limitations in Arkansas
The statute of limitations for collecting on a promissory note in Arkansas is 5 years (oral and written). After this period, the lender loses the right to file a lawsuit to enforce the note.
| Aspect | Arkansas Rule |
|---|---|
| Usury Rate | 17% |
| Statute of Limitations | 5 years (oral and written) |
| Small Claims Limit | $5,000 |
| Garnishment Rules | Up to 25% of disposable earnings; head of household exemption |
Sample Arkansas Unsecured Promissory Note
Below is a preview of our Arkansas-specific unsecured promissory note template.
STATE OF ARKANSAS
UNSECURED PROMISSORY NOTE
No Collateral Loan Agreement
LENDER:
Name: [Lender Name]
Address: [Arkansas Address]
BORROWER:
Name: [Borrower Name]
Address: [Arkansas Address]
LOAN TERMS
Principal: $[Amount]
Interest: [Rate]% per annum (max 17% in AR)
This note is UNSECURED. No collateral has been pledged.
Arkansas Unsecured Promissory Note FAQ
Answers to common questions about unsecured promissory notes and collection procedures in Arkansas.
Official Arkansas Resources
Use these official resources for Arkansas lending laws and court procedures.
Other Arkansas Promissory Note Types
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