Free Georgia Promissory Note Template

A Georgia promissory note is a signed, written promise to repay money on stated terms. In Georgia, the size of the loan decides which interest rules apply. Those thresholds sit at $3,000 and $250,000.

Chapter 4 of Title 7 of the Official Code of Georgia Annotated covers interest and usury. Section 7-4-2 sets the tiers.

7% Without a Written Rate

If no written contract establishes the rate, the legal rate is 7% a year simple interest. So a handshake loan earns 7%, whatever the parties had in mind.

More Than $3,000, Less Than $250,000

Here the parties may set any rate by written contract, along with charges and repayment terms. The rate must be expressed in simple interest terms as of the date of the evidence of the indebtedness. However, that freedom is subject to § 7-4-18, covered below.

$3,000 or Less

By contrast, a loan of $3,000 or less is capped at 16% a year simple interest. That cap lifts only if the loan is made under another law.

$250,000 or More

At this level, a written contract may set any rate, in simple interest terms or otherwise. It may also set any charges the borrower will pay.

What Counts as Interest

Under § 7-4-2(a)(3), interest means a charge for the use of money over the contract’s term. However, origination fees and discount points on a loan secured by an interest in real estate aren’t treated as interest.

Acceleration and Prepayment

Suppose interest is precomputed and the loan is then accelerated. In that case, § 7-4-2(b)(1) requires unearned interest to be rebated, so the rate earned matches the original contract. Also, subsection (b)(2) says there’s no prepayment penalty unless the contract stipulates one.

The lender forfeits the interest. Georgia courts have long held that usury works a forfeiture of all interest on the loan.

Section 7-4-18 sets the criminal usury limit, and § 7-4-2’s written-rate freedom is expressly subject to it. Georgia appellate decisions describe that limit as 5% per month. When a loan breaks that statute, the courts have held the loan illegal. Even then, the lender forfeits interest but may still collect the principal.

Two further points come from the case annotations to § 7-4-2:

• Charging or reserving maximum interest in advance has been held usurious.
• A commission deducted from the loan proceeds has also been treated as usury.

For those reasons, keep the rate and the deductions on a Georgia promissory note plainly inside the tier that fits your loan.

Tip: Under $3,000 and thinking about a rate above 16%? The Georgia Installment Loan Act may govern instead, so ask a Georgia attorney before you set the rate.

Getting the tier right comes first. Follow these steps:

1. Confirm the principal, and identify which tier it falls in.
2. Choose a rate for that tier, and state it in simple interest terms.
3. List any charges, and avoid deducting a commission from the money advanced.
4. Put the rate in writing, since without a written rate the note earns only 7%.
5. Date the note, and have the borrower and any cosigner sign.
6. Give each party a copy, and keep the original somewhere safe.

The standard terms apply here too, with the rate stated carefully.

• Lender and borrower names and addresses
• Principal amount
• Annual rate in simple interest terms, and the date of the note
• Any charges the borrower will pay
• Payment schedule and due date
• Acceleration and prepayment terms
• Collateral, if secured
• Signatures and dates

Start your Georgia promissory note template with Document Genius’s step-by-step questionnaire, and have it ready to sign in minutes.