A loan agreement in Florida is enforceable when it names both parties, states the principal and repayment terms clearly, complies with the state’s interest caps, and is put in writing whenever repayment stretches past one year. Most loans of $500,000 or less are capped at 18% annual interest, and any loan of any size that charges more than 25% crosses into criminal territory. The Florida loan agreement requirements below cover what belongs in the document, when a signature has to be on paper, and the tax and enforcement rules that decide whether a court will actually back you up.
What the Agreement Must Contain
Identify both parties by full legal name and address. State the exact principal amount. Spell out how and when repayment happens: the schedule (monthly, biweekly, lump sum), acceptable payment methods, and the total number of payments. Florida courts have little patience for agreements that leave core obligations to guesswork, and a vague loan amount or open-ended repayment schedule invites a challenge to the entire contract.
If you plan to charge late fees, put the amount in the agreement. Licensed consumer-finance lenders are capped at $15 per late monthly payment and $7.50 per late biweekly or semimonthly payment, and the borrower has to agree to the charge in writing before it can be imposed.1Florida Senate. Florida Code 516.031 – Finance Charge; Maximum Rates For private loans outside the Consumer Finance Act, no statutory cap on late fees exists, but courts can strike fees they find unconscionable.
Include a prepayment clause even if early payoff seems unlikely. Silence on prepayment breeds fights over whether the borrower owes a penalty for paying ahead. Federal Regulation Z restricts prepayment penalties on certain consumer mortgages, so lenders offering mortgages need to check federal compliance too.
A promissory note can accompany the agreement or serve as the primary document for simpler transactions. To hold up in court and qualify under Florida’s documentary stamp tax framework, it needs an unconditional promise to pay, a sum certain in money, and the borrower’s signature.2Florida Department of Revenue. Florida Documentary Stamp Tax on Promissory Notes A specific repayment schedule is good practice but not one of the required elements.
When the Agreement Has to Be in Writing
Florida’s Statute of Frauds requires certain agreements to be in writing and signed by the party being held to them. For loans, the trigger is repayment period, not dollar amount. If the loan will be repaid within one year, it can technically be oral. If repayment extends beyond one year, the agreement must be in writing to be enforceable.3Florida Senate. Florida Statutes 725.01 – Promise to Pay Another’s Debt, Etc. A $200 loan repayable over 18 months needs writing under 725.01; a $50,000 loan due in six months could theoretically be oral, though no sensible lender relies on that.
For any loan of meaningful size, a signed written agreement is the bare minimum. Oral loan disputes collapse into competing recollections, and Florida courts strongly prefer documentary evidence.
Interest Rate Caps
Florida’s usury statutes work in layers, and the cap that applies depends on the loan’s size and the lender’s intent.
Civil Usury on Loans of $500,000 or Less
For loans of $500,000 or less, interest above 18% per year is usurious under Florida Statutes 687.02 and 687.03.4Florida Senate. Florida Statutes Chapter 687 – Interest and Usury; Lending Practices A lender who willfully violates the cap forfeits all interest on the loan. If the borrower already paid usurious interest, the lender owes double that amount back.5The Florida Legislature. Florida Code 687.04 – Penalty for Usury Loans above $500,000 are exempt from the 18% civil cap but remain subject to the criminal thresholds.
Criminal Usury
Regardless of loan size, charging more than 25% per year is criminal. Interest between 25% and 45% is a second-degree misdemeanor; above 45% is a third-degree felony.6The Florida Legislature. Florida Code 687.071 – Criminal Usury, Loan Sharking Any loan made in violation of the criminal usury statute is entirely unenforceable. So for a loan above $500,000, the practical ceiling is 25%.
The Effective Rate Includes Fees
Courts look at the total cost of the loan, not just the stated interest rate. Origination fees, processing charges, and service costs get rolled into the calculation. A loan quoted at 16% can become usurious once mandatory fees push the annualized cost above 18%.
Usury Savings Clauses
Many agreements include a usury savings clause stating that if any charge exceeds the legal limit, the rate automatically drops to the maximum permitted amount. The Florida Supreme Court held in Jersey Palm-Gross Inc. v. Paper that these clauses can be evidence of the lender’s intent not to charge usurious rates, especially when the effective rate cannot be determined from the face of the agreement alone. A savings clause is worth including, but it will not rescue a loan whose actual terms clearly exceed the statutory limit.
Consumer Finance Act Licensing
Anyone making loans of $25,000 or less at interest rates above 18% must hold a license from the state under Chapter 516. Lending at those rates without a license is illegal no matter what the borrower agrees to.
Licensed consumer-finance lenders may charge above the standard 18% cap, but the rates are tiered: 36% per year on the first $10,000 of principal, 30% on the portion between $10,000 and $20,000, and 24% on the portion between $20,000 and $25,000.7The Florida Legislature. Florida Code 516.031 – Finance Charge; Maximum Rates Licensed lenders must also provide specific disclosures at the time the loan is made: amount and date of the loan, maturity date, nature of any security, names and addresses of both parties, and the interest rate charged.8Florida Senate. Florida Code 516.15 – Duties of Licensee The disclosures must be in English and in clear terms.
Collateral and Secured Loans
When a loan is backed by collateral, the agreement must describe the pledged property with enough detail that a third party could identify it. Florida follows Article 9 of the UCC. Under 679.1081, a description is sufficient if it “reasonably identifies what is described,” which can be done by specific listing, category, quantity, or any method that makes the collateral objectively determinable.9Florida Senate. Florida Code 679.1081 – Sufficiency of Description A description like “all assets of the borrower” is too vague. Name the specific vehicle, equipment, inventory, or receivables being pledged.
Perfecting the Security Interest
Describing collateral creates the security interest. It does not give the lender priority over other creditors. To establish priority, the lender must perfect the interest by filing a UCC-1 financing statement with the Florida Secured Transaction Registry.10Florida Secured Transaction Registry. Florida Secured Transaction Registry The filing must include the debtor’s legal name, the secured party’s name, and a description of the collateral. Skip this step and the lender falls behind later creditors who did file. In bankruptcy, an unperfected claim can be wiped out entirely.
Real estate collateral is different. The lender records a mortgage or lien with the county clerk’s office in the county where the property sits, and the recording triggers documentary stamp tax.
Default, Acceleration, and Enforcement
Spell out exactly what counts as a default. Missed payments are obvious. Lenders often add other triggers: a bankruptcy filing, a material misrepresentation on the application, or breach of a covenant such as keeping insurance on collateral. Vague default provisions invite litigation over whether a default actually happened.
An acceleration clause lets the lender demand the full remaining balance when the borrower defaults. Florida courts enforce these as long as they are clearly stated and applied reasonably. Accelerating over a trivial or disputed default can draw an unconscionability challenge.
For secured loans backed by personal property, Florida allows repossession after default without a court order, as long as it happens without breaching the peace.11Florida Senate. Florida Code 679.609 – Secured Party’s Right to Take Possession After Default No threats, no force, no confrontation. If the borrower objects or the situation escalates, the lender must back off and pursue a judicial remedy.
When real property is the collateral, Florida requires judicial foreclosure: file suit, get a court order, sell at public auction. If the sale price does not cover the loan balance, the lender can seek a deficiency judgment, though the court has discretion to grant one.12Florida Senate. Florida Code 702.06 – Deficiency Decree; Common-law Suit to Recover Deficiency
Attorney’s Fees Cut Both Ways
Many loan agreements include a clause letting the lender recover attorney’s fees if it has to sue to collect. In Florida, that one-sided clause triggers a reciprocal right. Under 57.105(7), when an agreement entitles one party to fees for enforcement actions, the court may award reasonable fees to the other party if that party prevails.13Florida Senate. Florida Code 57.105 – Attorney’s Fee; Sanctions for Raising Unsupported Claims or Defenses The word “may” gives the court discretion, but a lender whose case falls apart should expect the borrower to invoke this statute.
Electronic Signatures
Florida’s Uniform Electronic Transaction Act, at 668.50, gives electronic signatures the same legal weight as handwritten ones when both parties agree to sign electronically.14Florida Senate. Florida Code 668.50 – Uniform Electronic Transaction Act The signer must show clear intent, and the signature must be linked to the specific document in a way that can later be verified.
Platforms like DocuSign and Adobe Sign satisfy these requirements through digital certificates, timestamps, and audit trails. For most loan agreements that is enough. Promissory notes secured by real estate may still require notarization or added formalities to be recorded. If a borrower later disputes an electronic signature, the audit trail becomes the deciding evidence.
Documentary Stamp Tax
Florida taxes promissory notes and other written obligations to pay money at $0.35 per $100 (or fraction of $100) of the debt, capped at $2,450 per note.15Florida Senate. Florida Code 201.08 – Tax on Promissory or Nonnegotiable Notes, Written Obligations, and Mortgages On a $100,000 note, the tax is $350. When the loan is secured by a mortgage, the tax is paid on the mortgage at recording rather than on the note itself, at the same rate. Failing to pay the tax on a mortgage does not eliminate the lien, but the mortgage cannot be enforced in court until the tax is paid.
Imputed Interest on Private Loans
This one is federal but sits inside every Florida private loan. If you lend money at an interest rate below the IRS Applicable Federal Rate, the IRS treats the loan as if it charged the AFR regardless of what your agreement says, and the “missing” interest is imputed to the lender as taxable income under IRC Section 7872.
For January 2026, the short-term AFR (loans of three years or less) is 3.63%, the mid-term AFR (three to nine years) is 3.81%, and the long-term AFR (over nine years) is 4.63%.16Internal Revenue Service. Revenue Ruling 2026-2 These rates update monthly. On a zero-interest family loan, the whole AFR amount is imputed. The simplest fix is to set the rate at or above the AFR in effect when the loan is made.
Active-Duty Military Borrowers
The federal Servicemembers Civil Relief Act caps interest at 6% per year on debts a servicemember incurred before their military service began. For mortgage obligations the cap extends one additional year after service ends.17Office of the Law Revision Counsel. 50 USC 3937 – Maximum Rate of Interest on Debts Incurred Before Military Service “Interest” under the SCRA is defined broadly and includes service charges, renewal charges, and fees.
When a qualifying servicemember requests the cap, the creditor must forgive interest above 6%, reduce monthly payments accordingly, and refund excess interest already collected. The servicemember triggers the protection by sending written notice with a copy of military orders no later than 180 days after leaving active duty. Knowingly violating the provision is a federal offense carrying fines and up to one year in prison.
Watch the refinance trap: if a servicemember refinances or consolidates a pre-service debt while on active duty, the new obligation may not qualify because it was created during service rather than before it. The agreement should note whether either party is a servicemember and acknowledge the SCRA’s potential application.
How Long You Have to Sue
Wait too long and the right to enforce a written loan agreement disappears. Florida’s statute of limitations for actions on a written contract is five years.18Florida Senate. Florida Code 95.11 – Limitations on Actions Other Than for Recovery of Real Property The clock starts when the borrower first breaches, not when the loan was signed. For installment loans, each missed payment can start its own five-year window, which sometimes catches borrowers off guard years after they thought the debt was uncollectible. Foreclosure actions carry the same five-year limit.