Connecticut Promissory Note
Connecticut promissory note template within the 12% usury cap. Charging more is a crime under state law. Free template, 6-year SOL. Attorney review available.
Introduction
In Connecticut, charging more than 12% annual interest on an unlicensed, non-exempt loan is not just unenforceable, it is a crime: a violation carries a fine of up to $1,000, up to six months in jail, or both. A promissory note is the document that fixes the rate a lender can actually enforce, a written, signed promise by the maker to pay a definite sum to the payee, on demand or by a set date, whether the loan is between family, friends, or businesses. The 12% cap is not absolute: a lender licensed under Connecticut's Small Loan Act can charge more than 12% APR on a loan of $50,000 or less, and Connecticut General Statutes Section 37-9 exempts or separately regulates categories like bank loans, credit union loans, and larger real-property mortgages. The template below states the applicable rate against this cap directly, not as a placeholder to fill in blindly. A Connecticut note does not need to be notarized or witnessed to be enforceable. Confession-of-judgment clauses are restricted rather than flatly banned: void in retail installment and installment loan contracts, and unavailable at all as a prejudgment-remedy waiver on a personal loan. You generally have 6 years from a missed payment or the note's due date to sue to collect.
Key Things to Know
- 1
A promissory note is a written, signed promise by one party (the maker) to pay a definite sum of money to another party (the payee), either on demand or by a set date.
- 2
Connecticut caps interest on most private loans at 12% per year. Charging more without a license or exemption is a criminal misdemeanor, punishable by a fine of up to $1,000, imprisonment of up to 6 months, or both. (Conn. Gen. Stat. Sections 37-4, 37-7)
- 3
A lender licensed under Connecticut's Small Loan Act may charge more than 12% APR on a "small loan" of $50,000 or less (this threshold was raised from $15,000 in 2023). Separately, Section 37-9 exempts or differently regulates categories such as bank and credit union loans, real-property mortgages over $5,000, and qualifying business loans. The 12% figure is not a blanket cap on every lender or every loan type. (Conn. Gen. Stat. Sections 36a-555 to 36a-573, 37-9)
- 4
A Connecticut promissory note does not need to be notarized or witnessed to be enforceable. Connecticut General Statutes Section 42a-3-104 lists what makes a note a valid negotiable instrument (an unconditional promise, a fixed amount, a signature, payable on demand or by a definite date), and notarization is not one of the requirements.
- 5
Confession of judgment (a clause letting the payee obtain a court judgment against the maker without a full lawsuit) is restricted, not flatly banned. A confession-of-judgment provision in a retail installment contract or installment loan contract is void and unenforceable, and a borrower in a personal, family, or household ("consumer") loan cannot waive the right to notice and a hearing before a prejudgment remedy at all; that waiver is available only for business ("commercial") loans, through a specific statutory procedure. (Conn. Gen. Stat. Sections 36a-775, 52-278a, 52-278b, 52-278f)
- 6
You generally have 6 years from a missed payment or the note's stated due date to sue to collect on a written promissory note in Connecticut. (Conn. Gen. Stat. Section 52-576)
- 7
If a Connecticut promissory note is secured by personal property rather than real property, the lender generally needs to file a UCC-1 financing statement with the Connecticut Secretary of the State to protect its priority against other creditors. (Conn. Gen. Stat. Sections 42a-9-310, 42a-9-501)
Key decisions before you file
Before you file a Promissory Note in Connecticut, a few decisions shape the document: which option to choose and what each one means. The Promissory Note guide walks through them.
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Connecticut Requirements for Promissory Note
12% per annum on a private loan, unless the lender is licensed under the Connecticut Small Loan Act (for a loan of $50,000 or less) or the loan is exempt or separately regulated under Section 37-9. Violating the cap outside a license or exemption is a criminal misdemeanor under Section 37-7, punishable by a fine of up to $1,000, imprisonment of up to 6 months, or both.
The general 12% cap does not apply the same way to every loan; categories such as bank and credit union loans, bona fide real-property mortgages over $5,000, qualifying business loans, and certain motor vehicle, boat, and student loans are exempt or subject to a different statutory rate.
To be a valid negotiable instrument, a note must be an unconditional promise to pay a fixed amount, signed by the maker, and payable on demand or at a definite time.
Generally 6 years from a missed payment or the note's stated due date to sue to collect on a written promissory note.
Connecticut does not require a promissory note to be notarized or witnessed to be enforceable. Section 42a-3-104's list of what makes a note a valid negotiable instrument does not include notarization or witnessing; notarization is optional and used only for evidentiary purposes.
A confession-of-judgment provision in a retail installment or installment loan contract is invalid and unenforceable, and a borrower in a personal, family, or household loan cannot waive the right to notice and a hearing before a prejudgment remedy; that waiver is available only for a business loan, through a specific statutory procedure.
If a note is secured by personal property, the lender generally must file a UCC-1 financing statement with the office of the Connecticut Secretary of the State to perfect and prioritize its security interest against other creditors.
A person must be licensed under the Small Loan Act (or exempt) to make, arrange, broker, or service a loan of $50,000 or less carrying more than 12% APR to a Connecticut borrower; an isolated private loan kept at or below 12% does not trigger this licensing requirement.
Frequently Asked Questions
Connecticut caps interest on most private loans at 12% per year. Charging more without a license or an exemption is a criminal misdemeanor under Connecticut General Statutes Section 37-7, punishable by a fine of up to $1,000, up to 6 months in jail, or both. A lender licensed under the Small Loan Act can charge more than 12% APR on a loan of $50,000 or less, and Section 37-9 exempts or separately regulates categories like bank loans, credit union loans, and larger real-property mortgages.
No. Connecticut General Statutes Section 42a-3-104 lists what makes a note a valid, enforceable negotiable instrument, and notarization isn't one of the requirements. Notarizing a note is optional and can help as evidence of who signed it, but it doesn't affect enforceability.
Include the principal amount, an interest rate within Connecticut's 12% usury cap (or a documented license or exemption), the repayment schedule, what counts as default, and the signatures of the maker and payee. Since confession-of-judgment clauses are void in retail installment and installment loan contracts, and a personal loan borrower cannot waive prejudgment notice-and-hearing rights, leave that kind of clause out of a basic family or personal note.
Yes, as long as it meets the basic requirements of a valid contract and, if it's meant to be a negotiable instrument, the elements in Connecticut General Statutes Section 42a-3-104: an unconditional promise to pay a fixed amount, a signature, and payment on demand or by a definite date. It doesn't need to be notarized to be enforceable.
An unsecured note relies only on the maker's promise to pay. A secured note is backed by collateral, and if it's secured by personal property rather than real estate, the lender generally needs to file a UCC-1 financing statement with the Connecticut Secretary of the State to protect its priority against other creditors.
The payee can declare the remaining balance immediately due (if the note includes an acceleration clause) and can sue to collect. Connecticut restricts confession of judgment rather than allowing a shortcut to a judgment: the payee generally cannot get a judgment without a full lawsuit, especially on a personal, family, or household loan, where the maker cannot waive notice-and-hearing rights before a prejudgment remedy.
Generally 6 years from a missed payment or the note's stated due date, under Connecticut's statute of limitations for actions on a written contract (Conn. Gen. Stat. Section 52-576). Waiting too long can mean losing the right to sue on the note.
Yes. Promissory notes are commonly used for both family loans and business or LLC loans in Connecticut. The same 12% usury cap generally applies to both, though a business loan may qualify for a Section 37-9 exemption or a different rate ceiling that a personal loan would not, and only a business ("commercial transaction") loan can ever use the narrow prejudgment-remedy waiver procedure under Section 52-278f.