Does my state cap the interest rate on a business loan?

Yes, and it almost certainly does not apply to you. The pattern repeats across states.

Size

New York's General Obligations Law § 5-501 sets a general ceiling and then disapplies it for loans of $250,000 or more, except where secured primarily by a one- or two-family residence, and removes it entirely at $2.5 million and above.

Florida runs the same architecture at a different figure. Fla. Stat. § 687.03 sets a general 18% per annum simple interest ceiling, and it stops applying to loans exceeding $500,000. The statute catches a loan that exceeds $500,000 at any point during the term, even if the balance later falls.

Entity type

New York's General Obligations Law § 5-521 states that no corporation shall interpose the defense of usury in any action. There is one preserved route: subdivision 3 allows a corporation to raise a defence of criminal usury as described in Penal Law § 190.40, which makes it a class E felony to knowingly charge interest exceeding 25% per annum, or the equivalent for a longer or shorter period, without authorisation by law.

That is a criminal threshold, not a consumer-style rate cap, and it is not a tool for comparing offers.

Product structure

Usury law governs loans. A purchase of future receivables is not, on its face, a loan. Louisiana wrote the point into statute in 2025: R.S. 9:3137.10 defines a revenue-based financing transaction, states it is not a transaction for the use, forbearance or detention of money, and provides that amounts charged — fee, discount or otherwise — are not interest.

Elsewhere the question is argued case by case and turns on how contingent repayment really is. That is fact-specific and not something to resolve from an article.

Licensing

Some states exempt licensed lenders from general ceilings. Texas made the choice explicit for sales-based financing: its 2025 law prohibits the Finance Commission from setting a maximum annual percentage rate, finance charge or fee.

The clause that picks which state you are arguing about

Your state's statute is not automatically the statute. Commercial financing agreements name a governing law, and frequently a venue, and the two are sometimes different states from each other and from yours.

Courts do not always honour the choice. A chosen law can be displaced where another state has a materially greater interest and applying the chosen law would conflict with a fundamental policy of that state, and usury is one of the areas where that argument is actually run. But the starting point — and the practical reality for anyone without litigation money — is the state printed in your contract.

So read three clauses together before you form any view about caps: governing law, venue or forum selection, and any arbitration provision. An arbitration clause with a class waiver changes what is realistically available to you regardless of which usury statute applies.

Price it yourself, worked

Illustrative only — $75,000 funded with a 5% fee deducted at closing, so $71,250 reaches your account. Total repayment $101,250, delivered in 65 weekly payments of $1,557.69, about fifteen months.

Cost against the money you received is $30,000, which is 42.1% per dollar received. Computed against the $75,000 headline it would read 35%, and that understatement is the fee.

Flat, over 1.25 years, that is 33.7% a year. Because you are handing the money back throughout, the balance you actually hold averages roughly half the original, so doubling the flat figure gets you to the right neighbourhood: about 67%.

Solve it properly — the weekly rate that makes 65 payments of $1,557.69 equal to $71,250 — and you get 1.1394% a week, a nominal annualised 59.3%.

Three numbers, one deal. The one that matters for comparison is the last. The one that matters for your Friday is the $1,557.69.

If you think a price crosses a criminal threshold

Criminal usury statutes are enforced by prosecutors, not by borrowers, and the existence of a criminal threshold does not by itself hand you a civil remedy — New York's corporate rule, where a corporation may raise criminal usury as a defence but not civil usury, is the clearest illustration of how narrow the route is.

Two practical points. Raising it as a bargaining chip in a negotiation, without advice, is a poor idea: it puts a serious allegation on the record from someone who has not yet had the contract analysed. And whether a receivables purchase carries interest at all, for the purpose of any threshold, is the contested question underneath the whole subject. Take the documents to a lawyer in the governing state and let them form the view.

What to do about it

Assume no cap protects you, and price the deal yourself.

1. Total repayment minus the amount actually disbursed, divided by that disbursed amount. That is your cost per dollar received.
2. The expected number of months to repay, on your own revenue history rather than the funder's projection.

You need both. Cost without time is not a price. A factor rate is a multiplier with no time dimension, so it cannot be compared against an APR until you supply the term and do the conversion.

Statutes and thresholds change, and the treatment of receivables purchases is being legislated and litigated in parallel. Read the current text for your state before relying on any figure here.

This is general information and not legal advice for your situation.