Free Ohio Promissory Note Template

An Ohio promissory note is a signed, written promise to repay money on set terms. Ohio names promissory notes directly in its interest statute, and the ceiling it sets is low at eight percent. Several exceptions lift it.

Chapter 1343 of the Revised Code covers interest. For a note, § 1343.01 sets the maximum rate, and it names notes on its face.

The 8% Ceiling

Section 1343.01(A) covers a bond, bill, promissory note, or other instrument of writing for the forbearance or payment of money at a future time. In one, the parties may stipulate for interest at up to eight percent a year, payable annually. However, division (B) authorizes exceptions.

Above $100,000, No Ceiling

Meanwhile, division (B)(1) is the widest exception. A party may agree to pay more than eight percent where the original amount of the principal indebtedness stipulated in the note exceeds $100,000.

Demand Notes and Single Payments

Then division (B)(5) covers another category. There the ceiling lifts if the instrument is payable on demand or in one installment. That exception fails if the note is secured by household furnishings, or other goods used for personal, family, or household purposes.

Real Estate Security

Also, division (B)(4) uses a formula rather than a flat figure. Take a loan secured by a mortgage, deed of trust, or land installment contract on real estate that isn’t otherwise exempt. There the rate may not exceed eight percentage points above a federal benchmark.

That benchmark is the discount rate on ninety-day commercial paper at the Federal Reserve Bank in the Fourth Federal Reserve District. It is measured when the instrument is executed.

Securities Accounts

Finally, division (B)(2) exempts payments to a broker or dealer registered under the Securities Exchange Act of 1934. It applies to carrying a debit balance in a customer’s account. The balance must be payable on demand and secured by stocks, bonds, or other securities.

Eight percent, unless an exception applies. The Ohio Legislative Service Commission describes the rule the same way. Interest is generally capped at eight percent, while the parties may agree to more in the listed situations.

So for a private loan, the practical question is which side of $100,000 the principal sits on. Below that, and outside the other exceptions, eight percent is the ceiling for a term note.

Because structure matters too, the form of the note counts. A note payable on demand, or in a single installment, escapes the cap unless it is secured by household goods.

Tip: The $100,000 test looks at the original principal stipulated in the note. So an Ohio promissory note that starts below the threshold stays capped, even if later advances would push the total higher.

Here the structure of the note decides the ceiling. Follow these steps:

1. Confirm the original principal, and compare it with $100,000.
2. Decide whether the note is a term note, a demand note, or payable in one installment.
3. For a capped note, choose a rate at or below eight percent a year.
4. If the loan is secured by real estate, work out the Fourth District formula instead.
5. Have the borrower and any cosigner sign, and date the note.
6. Give each party a copy, and keep a record of every payment.

Again, the standard terms apply, because the structure has to be stated clearly.

• Lender and borrower names and addresses
• Original principal amount
• Annual interest rate, and how often it is payable
• Whether the note is payable on demand, in installments, or at a fixed date
• Payment schedule and due date
• Late payment and default terms
• Collateral, including any mortgage or deed of trust
• Signatures and dates

With Document Genius, a guided form builds your Ohio promissory note template in minutes, ready to download or e-sign.