Florida Loan Agreement
A Florida loan agreement sets the loan terms and caps most private-loan interest at 18 percent per year on loans of 500,000 dollars or less.
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Introduction
Under Florida law, a loan agreement is a written contract to lend money and be repaid with interest, and on a loan of 500,000 dollars or less that interest generally cannot exceed 18 percent per year. In Florida the interest a private lender may charge is capped. Under Florida Statutes Section 687.03, a loan of 500,000 dollars or less may not charge more than 18 percent per year in simple interest; charging above 18 percent up to 25 percent is civil usury, and a rate over 25 percent per year is criminal usury under Section 687.071. If a written agreement does not state a rate, Florida fills the gap with the rate set in Section 55.03, a floating rate the Chief Financial Officer publishes each quarter (Section 687.01). A loan that exceeds 500,000 dollars is not bound by the 18 percent cap and is limited only by the criminal-usury lines. Making an occasional private loan does not by itself require a license: a Florida Consumer Finance Act license is needed only of a person who engages in the business of making consumer finance loans (Section 516.02), and banks and other licensed lenders are exempt. Once the rate is set, a sound Florida loan agreement names the parties, the principal, the interest rate as a number, the repayment schedule, any late fee, and what counts as default. It should include an acceleration clause, which lets the lender demand the entire unpaid balance at once if the borrower misses payments. Put the terms in writing: a lawsuit on a written contract can be filed for five years, and a clear signed agreement protects both sides if the loan is later disputed. DocDraft builds your Florida loan agreement from your facts, with attorney review available before you sign.
Key Things to Know
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A Florida loan agreement writes down the lender's advance, the borrower's promise to repay, the amount, the rate, and the payment dates; the 18 percent civil usury ceiling binds a loan of 500,000 dollars or less, while a larger loan is not held to that cap.
- 2
Florida caps interest on most private loans. Under Florida Statutes Section 687.03, a loan of 500,000 dollars or less may not charge more than 18 percent per year in simple interest. Charging above 18 percent up to 25 percent is civil usury, and a rate over 25 percent per year is criminal usury under Section 687.071.
- 3
If a written loan agreement does not state an interest rate, Florida applies the rate set in Section 55.03 (Florida Statutes Section 687.01). That is a floating rate the Chief Financial Officer sets each quarter, so state your agreed rate in writing rather than leaving it blank.
- 4
You do not need a license to make an occasional private loan. A Florida Consumer Finance Act license is required only of a person who engages in the business of making consumer finance loans (Section 516.02). Banks, savings banks, trust companies, credit unions, and similar regulated lenders are exempt.
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A loan that exceeds 500,000 dollars is not bound by the 18 percent civil cap. Such a loan is limited only by the criminal-usury lines: a rate over 25 percent per year, and a felony rate over 45 percent per year, under Section 687.071.
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Put the loan in writing and keep it. A lawsuit on a written contract must be filed within five years in Florida (Section 95.11). A written, signed agreement is far easier to enforce than an oral one and fixes the agreed rate.
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Spell out default, acceleration, and any late fee. Define what counts as default, include an acceleration clause so the lender can demand the entire unpaid balance at once, and keep any late fee within the overall 18 percent usury cap so that interest plus fees do not push the loan into usury.
Key decisions before you file
Before you file a Loan Agreement in Florida, a few decisions shape the document: which option to choose and what each one means. The Loan Agreement guide walks through them.
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Florida Requirements for Loan Agreement
Maximum Interest Rate (Usury Cap)
Florida caps interest on most private loans. Under Florida Statutes Section 687.03, a loan of 500,000 dollars or less may not charge more than 18 percent per year in simple interest. Charging above 18 percent up to 25 percent is civil usury. State the rate as a number and keep a private loan at or below 18 percent per year unless you are an exempt or licensed lender.
Legal Rate When the Contract Is Silent
If a written loan agreement does not state an interest rate, Florida applies the rate set in Section 55.03 (Florida Statutes Section 687.01). That is a floating rate the Chief Financial Officer sets each quarter, so the number changes over time. Always write your agreed rate into the agreement so the default rate does not apply by accident.
Lender Licensing (Consumer Finance Act)
A Florida Consumer Finance Act license from the Office of Financial Regulation is required only of a person who engages in the business of making consumer finance loans (Florida Statutes Section 516.02). An individual making an occasional private loan is not in the business of lending and generally does not need a license. If you lend money repeatedly as a business, confirm whether you must be licensed before you lend.
Large Loans Over 500,000 Dollars
A loan that exceeds 500,000 dollars in amount or value is not bound by the 18 percent civil usury cap under Florida Statutes Section 687.03. Such a loan is limited only by the criminal-usury lines in Section 687.071: a rate over 25 percent per year, and a felony rate over 45 percent per year. Smaller private loans stay under the 18 percent cap.
Late Fees Within the Usury Cap
Florida has no single general statutory late-fee cap for an ordinary private loan, so the controlling limit is the usury ceiling. Interest plus any fees on a loan of 500,000 dollars or less must not exceed 18 percent per year (Florida Statutes Section 687.03). Set any late fee as a reasonable charge that does not push the total cost of the loan into usury.
Put the Loan in Writing
A loan need not be written to be enforceable in Florida, but writing it down is strongly advised. A written agreement fixes the agreed interest rate so the default rate does not apply, and it carries a five-year period to sue under Florida Statutes Section 95.11. Have both parties sign and date the agreement and keep a copy.
Default and Acceleration
Define default clearly, usually a payment missed past a stated grace period, a broken promise in the agreement, or the borrower insolvency. Include an acceleration clause so that on default the lender may declare the entire unpaid balance of principal and accrued interest immediately due. Stating any required notice and cure period avoids disputes about whether acceleration was proper.
Time Limit to Sue on the Debt
A lawsuit to collect on a written loan agreement must generally be filed within five years in Florida, running from the default (Florida Statutes Section 95.11). Keeping a signed written agreement gives you this longer, easier-to-prove period and fixes the terms if you have to collect the debt.