Missouri Loan Agreement
A Missouri loan agreement sets the loan terms and caps private-loan interest at 10 percent per year, with 9 percent applying if the rate is left blank.
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Introduction
When two parties put a loan in writing in Missouri, the agreement fixes the amount, the payback schedule, and the interest, which they may set at up to 10 percent per year, or the higher market rate the statute allows. In Missouri the interest you can charge is set by contract, with a cap. Under Missouri Statutes Section 408.030, the parties may agree in writing to interest of 10 percent per year, or the market rate if it is higher, and if the agreement does not state a rate the law fills the gap at 9 percent per year (Section 408.020). That cap binds ordinary private loans, but Section 408.035 lets the parties agree in writing to any rate on a loan to a company, a business or agricultural loan, a non-residential real estate loan, or a loan of 5,000 dollars or more secured by stock or bonds. Making an occasional private loan does not by itself require a license: a person who makes only an occasional consumer credit loan and is not regularly engaged in the business is not a licensed lender under Missouri Statutes Section 367.100, so a one-off personal loan is not licensed. Once the rate is set, a sound Missouri 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 written promise to pay money can be enforced for ten years, and a clear signed agreement is what protects both sides if the loan is later disputed. DocDraft builds your Missouri loan agreement from your facts, with attorney review available before you sign.
Key Things to Know
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A loan agreement is simply the loan reduced to writing, covering the principal, the due dates, and the interest rate, and Missouri lets the parties agree in writing to 10 percent per year or the market rate if it is higher.
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Missouri lets the parties set the rate in writing, up to a cap. Under Missouri Statutes Section 408.030, the parties may agree in writing to interest of 10 percent per year, or the market rate if it is higher (the long-term government bond index plus 3 percentage points). Keep an ordinary private loan within that limit.
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If a written loan agreement does not state an interest rate, Missouri sets the legal rate at 9 percent per year on money after it is due (Missouri Statutes Section 408.020). To charge a specific rate up to the 10 percent cap, state the rate in a written agreement.
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You do not need a license to make an occasional private loan. A person who makes only an occasional consumer credit loan and is not regularly engaged in the business is not a licensed lender under Missouri Statutes Section 367.100. A consumer credit lender license from the Missouri Division of Finance is for those in the business of lending.
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The 10 percent cap does not apply to every loan. Under Missouri Statutes Section 408.035 the parties may agree in writing to any rate on a loan to a corporation or company, a loan primarily for business, commercial, or agricultural use, a non-residential real estate loan, or a loan of 5,000 dollars or more secured by stock or bonds.
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Charging more than Missouri allows is costly. A borrower who paid usurious interest may recover twice the interest paid if suit is brought within five years (Missouri Statutes Section 408.030). Keep a private loan at or below the 10 percent cap unless it falls in an exempt category.
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Spell out default and acceleration, and keep the signed agreement. Define what counts as default, include an acceleration clause so the lender can demand the full unpaid balance at once, and remember that a lawsuit on a written promise to pay money must be filed within ten years (Missouri Statutes Section 516.110).
Key decisions before you file
Before you file a Loan Agreement in Missouri, 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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Missouri Requirements for Loan Agreement
Maximum Interest Rate (Usury Cap)
Missouri lets the parties set the rate in writing, up to a cap. Under Missouri Statutes Section 408.030 the parties may agree in writing to interest of 10 percent per year, or the market rate if it is higher (the monthly index of long-term United States government bond yields for the second preceding calendar month plus 3 percentage points). State the rate as a number and keep an ordinary private loan within that limit.
Legal Rate When the Contract Is Silent
If a written loan agreement does not state an interest rate, Missouri fixes the legal rate at 9 percent per year on money after it becomes due (Missouri Statutes Section 408.020). To charge a specific rate up to the 10 percent cap, the parties must state the rate in a written agreement. Always write the agreed rate into the agreement so the 9 percent default does not apply by accident.
Lender Licensing (Consumer Credit)
A consumer credit lender license from the Missouri Division of Finance is for a person engaged in the business of making consumer credit loans. Missouri Statutes Section 367.100 provides that a person who makes an occasional consumer credit loan, or who occasionally makes loans but is not regularly engaged in the business, is not a lender subject to those sections. If you lend money repeatedly as a business, confirm whether you must be licensed before you lend.
Business and Corporate Loans Are Not Capped
The 10 percent cap does not apply to every loan. Under Missouri Statutes Section 408.035 the parties may agree in writing to any rate on a loan to a corporation, partnership, or limited liability company, an extension of credit primarily for agricultural, business, or commercial purposes, a real estate loan other than a residential real estate loan, or a loan of 5,000 dollars or more secured solely by stock, bonds, or similar. Confirm the loan fits one of these categories before charging above 10 percent.
Usury Penalty (Double the Interest Paid)
Charging more than Missouri allows is usurious. Under Missouri Statutes Section 408.030 a borrower who paid excessive interest may recover twice the amount of the interest paid, provided the action is brought within five years. The remedy is civil, so the practical risk is losing double the overcharge. Keep a private loan at or below the 10 percent cap unless it falls within an exempt category under Section 408.035.
Put the Loan in Writing
A loan need not be written to be enforceable in Missouri, but writing it down is strongly advised. To charge a set rate up to the 10 percent cap the parties should agree to it in writing (Missouri Statutes Section 408.030); absent a written rate the 9 percent legal rate applies. A written agreement also fixes the schedule and remedies. 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 ten years in Missouri, the period Missouri Statutes Section 516.110 applies to an action upon a writing for the payment of money, usually running from the default or the last payment. Keeping a signed written agreement gives the longer, easier-to-prove period if you have to collect.