Delaware Promissory Note
Delaware's interest ceiling floats with the Federal Reserve. A written loan may carry up to 5 percent over the Federal Reserve discount rate, and there is no ceiling at all on a loan above $100,000 that is not secured by a mortgage on the borrower's principal residence. A lender has 6 years to sue on a promissory note.
What Delaware law does to this document
The interest ceiling
A lender may charge interest at any rate agreed in writing that is not more than 5 percent over the Federal Reserve discount rate, including any surcharge. Where no rate is stated, the legal rate is 5 percent over the discount rate. The ceiling moves when the Federal Reserve moves, so the lawful maximum depends on the date. In November 2026 the Federal Reserve listed a discount window primary credit rate of 4.00 percent, which would put the ceiling at 9 percent.
6 Del. C. § 2301(a)No ceiling above $100,000
There is no limit on the rate of interest that may legally be charged where the amount of the loan exceeds $100,000 and repayment is not secured by a mortgage against the borrower's principal residence. A loan of exactly $100,000 does not qualify. A loan of any size secured by a mortgage on the borrower's home stays under the ceiling.
6 Del. C. § 2301(c)What usury costs the lender
A borrower charged more than the lawful rate is not required to pay the excess and may deduct it from the debt. A borrower who has already paid the whole debt with unlawful interest may recover three times the excess interest collected or $500, whichever is greater. That action must be brought within 1 year after the payment.
6 Del. C. § 2304Business entities cannot raise usury
A corporation, limited partnership or limited liability company may not interpose the defense of usury in any action. The same bar applies to statutory trusts and business trusts. The ceiling therefore protects individual borrowers. A note signed by a person's LLC is not covered by it.
6 Del. C. § 2306Six years to sue on a note
An action arising from a promissory note may be commenced within 6 years from the accrual of the cause of action. That is longer than the 3-year period Delaware applies to actions on a promise generally. For an installment note, the lender should not assume a single date applies to every missed payment.
10 Del. C. §§ 8106(a), 8109A guaranty must be in writing
A promise to answer for the debt or default of another in any sum of $25 or more cannot be enforced unless it is in writing, or evidenced by a written memorandum, signed by the party to be charged. A co-signer or guarantor needs to sign the note or a separate written guaranty. A verbal assurance from a relative is not enforceable as a guaranty.
6 Del. C. § 2714(a)Where people go wrong in Delaware
- Expecting the generator to set a lawful rate: the draft prints the interest rate and any default rate you enter, with a savings clause, and does not calculate Delaware's ceiling, so check the Federal Reserve discount rate on the day the loan is made.
- Assuming the $100,000 exemption applies to a loan secured by a mortgage on the borrower's principal residence.
- Relying on an unsigned or verbal guaranty from a family member, which the Delaware statute of frauds does not enforce.
How the generator works
A clear, enforceable IOU between two people, with optional interest, a repayment schedule, and current security and default terms. Answer a short interview and the draft assembles as you go, with Delaware already set as the governing state. Download it as PDF or Word. No fee. No account.