Mohammed Faraj left his victim screaming in pain with a gaping wound down to the bone during the street attack.
Leeds Crown Court heard the weapon used by Faraj was a tool used to carry out plastering work and looked like a samurai sword.
Mehran Nassiri, prosecuting, said the 21-year-old victim was also a plasterer and knew Faraj from doing work for him.
Mr Nassiri said the background to the attack was a dispute between the two men over Â£180 Faraj owed the victim for work he had done for him.
Faraj targeted the victim in the early hours of September 3 last year as he walked along Kelsall Terrace, Leeds.
The defendant stopped his car and walked over to the victim holding the weapon before swinging it at his left arm.
The victim started screaming as Faraj walked back to his car and drove away.
He was bleeding heavily from the wound and went to a nearby cafe for help.
The victim received treatment at Leeds General Infirmary for a cut that went through muscle down to the bone.
He also suffered nerve damage which took around a year to heal.
Faraj, 37, of Nutting Grove Terrace, Farsley, pleaded guilty to unlawful wounding.
He has previous convictions for criminal damage and a public order offence.
Probation officer Michael Berry said Faraj had expressed remorse when interviewed about the offence, saying: "I regret it big time. Big time."
The court heard Faraj moved to the UK from Palestine in 1999 and gained a qualification in plastering.
Marcus Waite, mitigating, said it was accepted that Faraj had used serious violence but said the attack was out of character.
Faraj was jailed for two years, three months.
Recorder David Gordon told Faraj: "An immediate custodial sentence is inevitable because it is a serious matter."