Georgia Promissory Note



    Last Updated:

    A Georgia Promissory Note resembles an IOU, but with formal nuances. It's a compact between two entities, where one party borrows funds from the other and pledges to return it. It details all the critical specifics, such as the repayment timeline and interest fees. It extends beyond a handshake, serving as a legally enforceable agreement that maintains transparency and integrity amongst all parties.

    What is the Usury Rate for Georgia?

    Fundamentally, a usury rate signifies the highest lawful interest rate permissible on a loan. If more than this rate is charged, it's deemed "usury," which constitutes illegality. Rates fluctuate between states, hence being cognizant of regulations in your precise region is vital. By understanding the usury rate, you ascertain responsible borrowing, circumventing potentially detrimental scenarios. Consequently, it's an invaluable figure to possess if contemplating a loan for your enterprise.


    For Georgia, the default is 7% if no written contract is established. For written contracts, the maximum 16% on loans below $3,000; 5% per month on loans between $3,000 and $250,000, and no limit on loans above $250,000. (Ga. Code Ann. § 7-4-2 and Ga. Code Ann. § 7-4-18)

    Contract Template


    📄 Download
    📄 Word Template 📄 PDF Template
     

    Read on to learn more about Georgia Promissory Notes, including:

    What's included in a Georgia Promissory Note?

    Here are some key components that are typically included in a Georgia Promissory Note:

    1. Amount and Terms of the Loan
    2. Closing and Delivery
    3. Representations, Warranties the Company
       
      1. Organization, Good Standing and Qualification
      2. Corporate Power
      3. Authorization
      4. Compliance with Laws
      5. Use of Proceeds

    1. Amount and Terms of the Loan

    "The Loan" stipulates the precise sum of funds you're granting to the firm. This subsection carries importance as it warranties lucidity and shield for both entities involved. To finalize this provision, conveniently insert the loan quantity in the vacant space. Additionally, observe "Exhibit A", portraying the promissory note serving as the penned assurance and proof of the loan.

    To summarize—this crucial stipulation accentuates the capital you're pledging, laying a clear bedrock for your promissory note arrangement.

    The Loan.  Subject to the terms of this Agreement, Purchaser agrees to lend to the Company at the Closing $_________ (“Loan Amount”) against the issuance and delivery by the Company of a promissory note for such amount, attached as EXHIBIT A (“Note”). 

    2. Closing and Delivery

    The CLOSING AND DELIVERY clause establishes the concluding steps within your promissory note accord. In Closing, you'll designate the moment the transaction culminates. This date can be cooperatively determined, not exclusively the contract formation date.

    Delivery outlines the transfer mechanism: the borrower conveys the loan sum to the firm, and reciprocally, the company furnishes the borrower with the finalized promissory note, chronicling the borrower's repayment duty. This reciprocal swap guarantees openness and dedication from all involved parties.

    CLOSING AND DELIVERY


    Closing.  The closing of the sale and purchase of the Notes (the “Closing”) will be held on the Effective Date, or at such other time as the Company and Purchasers may mutually agree (such date is referred to as the “Closing Date”).

     

    Delivery.  At the Closing (i) Purchaser will deliver to the Company a check or wire transfer funds in the amount of the Loan Amount; and (ii) the Company will issue and deliver to Purchaser a Note in favor of Purchaser payable in the principal amount of Purchaser’s Loan Amount.

    3. Representation, Warranties The Company

    This portion encompasses the firm's declarations concerning its veracity regarding crucial specifics. They're legally obligated to maintain accuracy, precluding potential legal matters. Incorporate pertinent information about the enterprise's finances, operations, or legal affairs. Upholding trust and openness in your arrangement is of utmost importance.

    a. Organization, Good Standing and Qualification

    The Organization, Good Standing, and Qualification section confirms the company's lawful status. Highlight the state where the business is organized, ensuring smooth operations and building confidence among everyone involved.

    Organization, Good Standing and Qualification.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of [State].  The Company has the requisite corporate power to own and operate its properties and assets and to carry on its business as now conducted and as proposed to be conducted.  The Company is duly qualified and is authorized to do business and is in good standing as a foreign corporation in all jurisdictions in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a material adverse effect on the Company or its business.

    b. Corporate Power

    The Corporate Power section confirms the company's legal ability to carry out this agreement and fulfill obligations. It basically says, "Our business has the legal right to this deal." It's crucial for strengthening trust and legality. So, be sure to include this clause and understand it clearly.

    Corporate Power.  The Company has all requisite corporate power to execute and deliver this Agreement, to issue the Note and to carry out and perform its obligations under the terms of the Note.  

    c. Authorization

    The Authorization section encompasses company shareholders' approval and the note's lawfulness assurance. It's a vital part of your agreement that affirms all required business actions are completed. This segment shields both entities involved and sets a solid foundation for your contract.

    Authorization.  All corporate action has been taken on the part of the Company, its directors and its stockholders necessary for the authorization of the Note and the execution, delivery and performance of all obligations of the Company under the Note.  The Note, when executed and delivered by the Company, will constitute valid and binding obligations of the Company enforceable in accordance with its terms, subject to laws of general application relating to bankruptcy, insolvency, the relief of debtors.

    d. Compliance with Laws

    The Compliance with Laws portion confirms that your business isn't intentionally violating any rules potentially imperiling its functionality. Adding this clause reassures all parties about your company's unwavering commitment to uphold legal standards.

    Compliance with Laws.  To its knowledge, the Company is not in violation of any applicable statute, rule, regulation, order or restriction of any domestic or foreign government or any instrumentality or agency in respect of the conduct of its business or the ownership of its properties, which violation would materially and adversely affect the business, assets, liabilities, financial condition or operations of the Company.

    e. Use of Proceeds

    The Use of Proceeds segment outlines that the loan is meant exclusively for business purposes, not personal. It's key to ensuring clarity and maintaining accountability with lenders.

    Use of Proceeds.  The Company will use the proceeds of the Note for the operations of its business, and not for any personal, family or household purpose.

    Can a promissory note be used without a mortgage?

    Absolutely, it's possible to use a promissory note without needing a mortgage. A promissory note acts like a legal promise, outlining the terms of a loan. On the other hand, a mortgage is like ensuring the loan, tying it to assets such as properties. Promissory notes can come into play for both kinds of loans, secured and unsecured. So, having a promissory note without a mortgage, which is essentially an unsecured loan, is indeed doable. However, you typically can't have a mortgage without a promissory note, as this note defines your repayment plan and is your promise to pay back the loan.

    How do you collect from a promissory note?

    To recuperate from a promissory note, start by calculating the entire amount due including interest and fees. Next, politely write a letter to the debtor. If payment isn't forthcoming, consider your legal options. Make sure you keep all relevant documents and seek legal counsel, as laws differ from place to place. Remember, constantly nagging the debtor could cross legal boundaries. It's always smart to consult with a lawyer to avoid any missteps.