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How usury laws can affect business owners in Florida

Floridians often think of usury laws from the point of everyday consumers. However, everyday consumers own businesses too. To operate and grow that business, the owner may need a business loan, auto loan or other short-term loans to fill gaps caused by late payments or low inventory turnover. Because of this, usury laws can affect businesses too.

According to Credit Karma, usury laws set limits on the fees and interest rates that lenders can charge before it becomes illegal. Usury laws tend to be regulated at the state level and varies across state lines. A U.S. Supreme Court muddied the waters even more by allowing some banks to charge the interest rate of their location instead of where the debtor lives. This may hold true even if the allowed interest rates in the bank’s location are much higher.

If business owners suspect the interest rates on their loans or credit cards are illegally high, they first need to double-check the laws. They also need to verify what state laws governs the interest rates the lender sets. Even for people who started to make payments on the loan, if they suspect usury, they may pursue legal recourse.

According to FindLaw, Florida’s state maximum for the legal interest rate may change annually. The comptroller of the state determines the limit by a complex formula involving the averaged federal discount rate. Some of the more standard provisions include the following:

  •          Misdemeanor for keeping records or books for loans at 25%
  •          Misdemeanor for credit rate interest of 25% to 45%
  •          Third-degree felony for interest rates over 45%

Unfortunately, there are some exceptions and these include businesses with specific licenses for making loans. Exceptions may also include businesses that sell motor vehicles. Business owners should keep this in mind when seeking out capital for their business.

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