Legal Question in Business Law in Massachusetts

An individual whose direction I was pointed in by mutual friends needed a loan for a lisenced medical marijuana grow operation (for supplies, rent ect.). Because the nature of his business makes getting a bank loan near impossible, he proposed I give him a loan for which he would pay me back double my money within about a 14 month timeframe . On paper, his projected profits made this seem feasible and we contracted for these payments which would double my money over the course of three installments of repayment (the contract lays out only the terms of the loan, not the purpose). I trust him, and still do, but having just learned about usury laws that set limits on interest rates in the neighborhood of 20%, I'd like clarification from someone who understands this legal principle to explain to me weather it's likely that usury laws would prevent my contract from being protected in court if I ever need it to be. Does usury apply here because doubling my money is more than a 20% return on investment? Or does it not apply because the return Contracted for is a fixed sum not based on an interest rate? Is the contract legally protected by the fact that he, not I, proposed the terms? (the money involved exceeds the maximum for small claims court, if that matters)

Asked on 7/07/16, 12:15 pm

1 Answer from Attorneys

If you are making a loan for a commercial purpose and the amount is in excess of 20% per annum, you have to send a letter to the Attorney General's office informing them of that fact and then you will not be subject to the usury law penalties.

If you want to discuss the matter without obligation please feel free to call me.

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Answered on 7/07/16, 2:51 pm

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