Updated October 11, 2026. Quick answer: 8% a year, except a written contract signed by the debtor for $100,000 or more, and 6% a year when no rate is agreed (Minn. Stat. 334.01).
Minnesota promissory note at a glance
| Item | What the documents say |
|---|---|
| Maximum interest rate on a private loan | 8% a year ($8 on $100 for one year); not applied to a written contract signed by the debtor for $100,000 or more, except as stated in section 58.137 and, for a conventional loan or contract for deed, section 47.20 subd. 4a |
| Rate if the note names none | 6% a year ($6 on $100 for a year) unless a different rate is contracted for in writing |
| Penalty for charging too much | A provision raising the rate after maturity, or any increase after making and delivery, works a forfeiture of the entire interest (334.01 subd. 1), except for notes that bear no interest before maturity and for agreements extending the maturity date; a penalty for exceeding the cap is not established by the documents read |
What Minnesota law says about interest
Minnesota allows parties to contract in writing for a rate, but no one may take more than $8 on $100 for one year (8 percent) on a loan of this kind.
Interest on a legal indebtedness is $6 upon $100 for a year (6 percent) unless a different rate is contracted for in writing.
The 8 percent limit does not apply to a loan under a written contract, signed by the debtor, for the extension of credit to the debtor in the amount of $100,000 or more, except as stated in section 58.137 and, for a conventional loan or contract for deed, section 47.20, subdivision 4a (section 334.01, subdivision 2); a provision raising the rate after maturity or after making and delivery works a forfeiture of the entire interest, except for notes that bear no interest before maturity and for agreements extending the maturity date (subdivision 1).
The sources in their own words
- Interest limit: “than $8 on $100 for one year” (Minn. Stat. 334.01 Rate of Interest).
- Rate when none is agreed: “at the rate of $6 upon $100 for a year” (Minn. Stat. 334.01 Rate of Interest).
- Rate when none is agreed: “unless a different rate is contracted for in writing” (Minn. Stat. 334.01 Rate of Interest).
- Exemption or penalty: “in the amount of $100,000 or more” (Minn. Stat. 334.01 Rate of Interest).
- Time limit to sue: “must be commenced within six years after the due date or dates” (Minn. Stat. 336.3-118 Statute of Limitations).
- Signature: “the person signed the instrument” (Minn. Stat. 336.3-401 Signature Necessary for Liability on Instrument).
If you’re ready to put it in writing
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Signing the note: signature, witness, notary
Under UCC 336.3-401 a person is not liable on an instrument unless the person (or an authorized agent) signed it. A note is signed by the person who promises to pay.
None of the sections read for Minnesota requires a witness or a notary for the note itself. A note secured by real property is a separate question; see what an intra-family mortgage requires.
How long a lender has to sue
Minnesota’s enacted UCC 336.3-118 requires an action on a note payable at a definite time within six years after the due date; 541.05 sets six years for other contract actions.
A worked example: a $20,000 note
Suppose a relative lends you $20,000 and you sign a note for 5 years at 7% a year, paid monthly. With r = 7%/12 and n = 60 months, the level payment is principal times r divided by (1 minus (1 + r) to the power of negative n): $396.02 a month, computed here from these assumed inputs, not quoted. Over the 60 payments that is $23,761.20 in total, of which $3,761.20 is interest.
The 7% rate sits inside the Minnesota limit in the table above, which is why it was chosen. The federal side of a loan between relatives is covered at family loan minimum interest rate and AFR rates by month.
A loan or a gift?
A loan that may never be repaid is taxed differently; see family loan vs gift, forgiving a family loan and gift tax by state.
What the documents do not say
- A statutory penalty for exceeding the 8% cap was not read.
- Silence on a witness or notary in the sections read is not proof that no other Minnesota law requires one.
Common mistakes
- Charging more than 8% in Minnesota (written contracts of $100,000 or more are exempt) is barred by 334.01 subd. 1; the sections read state no penalty for exceeding the cap, but a clause raising the rate after maturity or after delivery works a forfeiture of the entire interest.
- Leaving the rate out: the legal rate of 6% applies when a note names none, and it is rarely what the parties meant.
- Waiting too long to enforce: Minnesota allows 6 years to sue on a written note.
Related: promissory notes by state, promissory note requirements, family loan minimum interest rate, and gift tax by state.
Sources
- Minn. Stat. 334.01 Rate of Interest: https://www.revisor.mn.gov/statutes/cite/334.01
- Minn. Stat. 336.3-118 Statute of Limitations: https://www.revisor.mn.gov/statutes/cite/336.3-118
- Minn. Stat. 336.3-401 Signature Necessary for Liability on Instrument: https://www.revisor.mn.gov/statutes/cite/336.3-401
Sources: the primary documents linked above, read on October 11, 2026. General information, not legal or tax advice. Statutes change and courts read them, so confirm anything consequential with a lawyer licensed in your state.