Minnesota Promissory Note
Minnesota promissory note template with the state's 8% usury cap and 6-year statute of limitations under state law. Free template. Attorney review available.
Introduction
Minnesota's own commercial code says a promissory note can authorize the payee to confess judgment against the maker without losing its status as a negotiable instrument. But confessing judgment on a Minnesota note takes more than a clause in the text: Minnesota Statutes Sections 548.22 and 548.23 require a separate document, a statement signed and verified by the maker, or an attorney-filed plea backed by an instrument "distinct from" the note itself, filed directly with the court. A promissory note itself is a written, signed promise by one party, the maker, to pay a definite sum to another party, the payee, on demand or by a set date. The template below builds that structure into an actual fillable Minnesota note. Minnesota caps interest at 8% per year on a general private loan set in writing, with a 6% default rate absent a written rate. A loan under $100,000 for business or agricultural purposes follows a different formula, up to 4.5 points over the 90-day commercial paper discount rate at the regional Federal Reserve Bank, open to any lender, not just a bank. Loans of $100,000 or more are exempt from Chapter 334's rate limits entirely. A Minnesota note doesn't need to be notarized or witnessed to be enforceable, and 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
Minnesota caps interest at 8% per year on a general private loan when a rate is set in writing, with a 6% default rate if no written rate is set at all. A loan under $100,000 for business or agricultural purposes follows a different formula, up to 4.5 percentage points over the 90-day commercial paper discount rate at the regional Federal Reserve Bank, and loans of $100,000 or more are exempt from Chapter 334's rate limits entirely. (Minnesota Statutes Sections 334.01, 334.011)
- 3
A Minnesota promissory note does not need to be notarized or witnessed to be enforceable. Minnesota Statutes Section 336.3-104 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 isn't one of the requirements.
- 4
Confession-of-judgment clauses (letting the payee obtain a court judgment without a full lawsuit) are not banned outright in Minnesota, but they only work through a separate court filing, either a statement signed and verified by the maker or an attorney-filed plea with a document distinct from the note itself, under Minnesota Statutes Sections 548.22 and 548.23. A confession-of-judgment provision written into a consumer credit sale contract specifically is void under Minnesota Statutes Section 325G.16.
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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 Minnesota. (Minnesota Statutes Section 541.05, Subdivision 1(1))
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If a Minnesota promissory note is secured by personal property, the lender generally needs to file a UCC-1 financing statement with the Minnesota Secretary of State to protect its priority against other creditors. (Minnesota Statutes Section 336.9-310)
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Promissory notes are commonly used in Minnesota for family loans, small business loans, and LLC loans between members. A private, occasional lender does not need a Minnesota Regulated Loan Act license, which only applies to someone engaged in the business of making loans. (Minnesota Statutes Section 56.01)
Key decisions before you file
Before you file a Promissory Note in Minnesota, 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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Minnesota Requirements for Promissory Note
For a general private loan, the maximum rate is 8% per annum if set in writing; the default statutory rate absent a written rate is 6% per annum. A loan under $100,000 for business or agricultural purposes follows a different formula (Minnesota Statutes Section 334.011), and a loan of $100,000 or more under a signed written contract is exempt from Chapter 334's rate limits entirely.
Generally 6 years from a missed payment or the note's stated due date to sue to collect on a written promissory note, under the general limitations period for an action on a written contract.
A Minnesota Department of Commerce lender's license under the Minnesota Regulated Loan Act is required only for a person engaged in the business of making loans. An isolated private person-to-person promissory note does not trigger this licensing requirement.
If a note is secured by personal property, the lender generally must file a UCC-1 financing statement with the Minnesota Secretary of State to perfect and prioritize its security interest against other creditors.
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.
Confession of judgment on a Minnesota note is accomplished only through a separate document, a debtor-signed and verified statement or an attorney-filed plea with an instrument distinct from the note, filed with the court; a clause embedded in the note itself does not by itself create an enforceable confession of judgment. A confession-of-judgment power of attorney written into a consumer credit sale contract specifically is void (Minnesota Statutes Section 325G.16).
Minnesota does not require a promissory note to be notarized or witnessed to be enforceable. Section 336.3-104'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.
For a loan under $100,000 for business or agricultural purposes, any lender, not only a licensed institution, may charge interest at up to 4.5 percentage points over the 90-day commercial paper discount rate at the Federal Reserve Bank for the district covering Minnesota, notwithstanding the general 8% cap that applies to other private loans.
Frequently Asked Questions
For a general private loan, Minnesota caps interest at 8% per year when the rate is set in writing, with a default rate of 6% per year if no rate is written down. A loan under $100,000 for business or agricultural purposes follows a different formula, up to 4.5 percentage points over the 90-day commercial paper discount rate at the regional Federal Reserve Bank, and loans of $100,000 or more are exempt from these rate limits entirely.
No. Minnesota Statutes Section 336.3-104 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 Minnesota's usury rules, the repayment schedule, what counts as default, and the signatures of the maker and payee. Leave out a confession-of-judgment clause: Minnesota law allows confession of judgment on a debt, but only through a separate court-filed document, not a clause written into the note itself.
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 Minnesota Statutes Section 336.3-104: 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, the lender generally needs to file a UCC-1 financing statement with the Minnesota Secretary of 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. Confession of judgment is legally possible in Minnesota, but only as a separate document, a statement signed and verified by the maker or an attorney-filed plea with an instrument distinct from the note, filed with the court; a clause inside the note itself doesn't accomplish that on its own.
Generally 6 years from a missed payment or the note's stated due date, under Minnesota's statute of limitations for actions on a written contract (Minnesota Statutes Section 541.05, Subdivision 1(1)). Waiting too long can mean losing the right to sue on the note.
Yes. Promissory notes are commonly used in Minnesota for both family loans and business or LLC loans. A private, occasional lender doesn't need a Minnesota Regulated Loan Act license, which applies only to someone engaged in the business of making loans, though which interest-rate rule applies can differ depending on whether the loan is for personal use or for a business or agricultural purpose.