Free Arkansas Loan Agreement

Loan Agreement Arkansas: Interest Rates

Whether you sign a loan agreement or a promissory note, you are simply making a promise to pay back the amount loaned. A loan agreement refers to a document drawn up between a lender and a borrower to specify the amount lent to the borrower, the details of the parties involved, method of payment, loan repayment schedule, and the collateral for the loan. It’s also called a loan contract or a promissory note.

Note, however, that the loan agreement is different from the promissory note in that the promissory note is ideally used for small loan amounts where the borrower promises to repay the loan within a specific time by signing a promissory note. The lender doesn’t sign the promissory note, but both the lender and the borrower have to sign the loan contract for the document to be enforceable. The terms and the sections covered in the business loan agreement are significantly more than the ones in the promissory note.

So, how that we have the basics out of the way and you understand what makes the difference between the two contractual agreements noting that a lender agrees to pay the lent amount, let’s look at the loan agreement documents and where you can find one. To get started with the agreement document, the first thing you need to do is to find a sample loan agreement in Arkansas. Our free Arkansas loan agreement form is editable, and it has all the important sections you need to ensure that you create an airtight and an enforceable agreement.

Essentials of the promissory notes/ loan agreements in Arkansas

Loan Amount and Usury Laws

One of the most important components that must be included in the loan agreement is the loan amount. The loan amount represents the amount of money that the lender agrees to give the borrower. Lenders will charge interest on the loan amount, often a percentage, and the value of the interest charged added to the principal amount. The rate of interest could be fixed, meaning that you know beforehand the amount of money that you’d have to pay back at the end of the loan repayment period. Alternatively, the lender might charge compound interest on the loan. Generally, the compound interest is a higher rate than the fixed rate of interest, and you’d end up paying more for the loan.

But before you choose to get a loan with a lender because the interest rates appear favorable, you first need to make sure that the interest charged is reasonable and within the legal limits or not. The state of Arkansas, like all the other states, has set limits on the interest rates charged on loans, stipulated in Amendment 89 of the constitution. These laws on interest rates are called usury laws (traditionally), and it specifies the interest rates to be charged to business borrowers and consumers and the penalties for the lenders who are found flouting the rules. And even though credit cards companies don’t follow these rules, and that the law will have exceptions for specific lenders or even allow higher interest rates for others, the maximum legal interest rate charged is 5% above the Federal Reserve Discount Rate) for consumers and non-consumers. The consumer rate is, however, capped at 17%. For interest rates on legal judgments, the state has a maximum limit of 6% where there is no other rate of interest agreed upon.

Lenders or contracts found calling for rates higher than the rates legally accepted will be punished – the unlawful/ higher rate will be deemed void for the unpaid interest, while the debtor might get lucky, recovering up to twice the amount of interest paid.

Repayment terms/ schedule

The lender would, for instance, agree to repay the loan amount in one, three, or six separate payments. These details will be specified in a schedule for payment and the expected date for each payment specified.

Method of payment

Here, the agreement specifies how the loan will be repaid by noting the method of debt payment and specifying the financial instrument that would be used in the payment, for example, check or any other instrument.


The collateral specific what the borrower puts up as security for the loan, in case they fail to repay the collateral amount as per the agreed terms and timelines. Collateral is valued by the lender, and it could be anything from a vehicle to a building or shares.


The agreement will also specify the steps to be taken by the lender if the borrower defaults their payment. Everything from the remedies of default, penalties for late payments, as well as what happens when the borrower files for bankruptcy.

Other important clauses include the clauses for severability, modification, and integration will be covered in this agreement.

If you wish to create a legally binding loan agreement as per the state law in Little Rock, Fayetteville, Fort Smith, Hot Springs, Conway, Bentonville, or any other city in Arkansas, get our free loan agreement form today.