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Dimitry K., Esq.
Dimitry K., Esq., Attorney
Category: Finance
Satisfied Customers: 41220
Experience:  NASD Licensed Rep, 1997-2001, Business Attorney
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I have a co-worker that wants me to loan $30,000 dollars to

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I have a co-worker that wants me to loan $30,000 dollars to him to start up his business. He offer to pay it back on the 91st day @80% interest. For a total payback of $36,000. Is this legal? How would I structure a contract for this type of payout.
Submitted: 5 years ago.
Category: Finance
Expert:  Dimitry K., Esq. replied 5 years ago.
Thank you for your question.

Sorry, but such a contract would likely violate state usury laws. Under Texas laws, commercial loans are authorized by Chapter 306 of the Texas Finance Code and can not bear more than 18 percent of interest annually although the loan may float with inflation to 24 percent. Commercial loans exceeding $250,000 can bear up to 28 percent. This type of a transaction would fail under Texas laws, and would allow your co-worker to walk away from the deal, claiming that the whole transaction is usurious and therefore illegal. I would suggest you consider a different option.

Good luck.
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