Free Delaware Promissory Note Template

A Delaware promissory note is a signed, written promise to repay a loan on set terms. Delaware ties its interest limit to the Federal Reserve discount rate, so the cap on your note moves with federal rates.

Chapter 23 of Title 6 of the Delaware Code covers interest. For a note, however, only a handful of its sections matter most.

Put the Rate in Writing

Under 6 Del. C. § 2301(a), a lender may charge a rate agreed upon in writing, within the limit covered below. If the contract states no rate, the legal rate applies instead. That rate is 5% over the Federal Reserve discount rate, including any surcharge, as of the time interest is due.

Business Borrowers Can’t Claim Usury

In addition, § 2306 says the following can’t raise usury as a defense in any action:

• Corporations and limited liability companies
• Limited partnerships
• Statutory trusts and business trusts
• Associations or joint stock companies with corporate powers that individuals and partnerships don’t have

Secured Demand Loans

Meanwhile, § 2302 carves out demand loans of at least $5,000 that are secured by pledged negotiable instruments. Examples include stock certificates, bonds, certificates of deposit, warehouse receipts, and bills of lading. For those loans, the parties may also agree in writing on any sum as compensation.

Judgment Interest and Transferred Notes

After a judgment on an agreement under § 2301(a), interest runs at the lower of two figures. Those are the contract rate and 5% over the Federal Reserve discount rate. Separately, § 2305 says the chapter doesn’t affect holders of negotiable paper taken in good faith in the usual course of business.

For most loans, 5 percentage points over the Federal Reserve discount rate, including any surcharge. Because that benchmark changes, check it on the day you sign.

Loans Over $100,000

However, § 2301(c) removes the limit entirely when two conditions are met:

• The amount loaned exceeds $100,000
• Repayment isn’t secured by a mortgage on any borrower’s principal residence

If the Rate Goes Too High

The borrower’s remedies appear in § 2304(b). First, a borrower doesn’t have to pay the excess over the lawful rate and may deduct it from the debt. Second, a borrower who repaid the whole debt with excess interest may sue. The recovery is three times the excess interest or $500, whichever is greater. However, that lawsuit must be brought within one year after the payment.

Tip: The Federal Reserve discount rate moves over time. Record the rate you relied on and the date you checked it alongside your Delaware promissory note.

A few checks before signing keep the note within the law. Use these steps:

1. Confirm the principal, and note whether a principal residence secures the loan.
2. Check the Federal Reserve discount rate on the signing date, and add 5 percentage points to find the limit.
3. Write your agreed annual rate into the note.
4. If the borrower is a corporation, LLC, or similar entity, confirm its exact legal name and signer.
5. Date the note, and have the borrower and any cosigner sign.
6. Give each party a copy, and keep the original somewhere safe.

The usual terms apply. Even so, in Delaware, pay extra attention to the rate, the loan size, and the borrower type.

• Borrower and lender names and addresses
• Borrower type, such as individual or LLC
• Principal amount
• Annual interest rate, in writing
• Collateral, including whether a principal residence secures the loan
• Payment schedule and due date
• Late payment and default terms
• Signatures and dates

Document Genius’s guided form walks you through each term, so your Delaware promissory note template is ready to download or e-sign in minutes.