Court Upheld $10 Million Non-Residential Loan Terms
Michigan businesses securing large loans on non-residential property face specific usury law exemptions.
Updated on Oct. 7, 2026 in Financial Planning
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A Michigan court granted summary judgment in a case involving a $10 million loan, confirming the agreement met state statutory requirements for interest rate caps. The ruling clarified that the loan was secured by non-residential real property.
Why it matters
This ruling highlights how state usury laws apply to high-value commercial credit. It establishes that loans exceeding $100,000 secured by non-single-family residential property are exempt from standard interest rate caps in Michigan.
State law sets a 25% general usury rate limit, but court findings indicate loans over $100,000 secured by non-residential real property fall outside this cap.
The players
Private Financing Alternatives, LLC
A private lender that issues commercial loans and manages credit agreements.
Walloon Lake Holdings, LLC
A business entity that secures and manages real estate-backed credit.
The details
The court applied a specific exception within Michigan Compiled Laws §438.31c(11) to validate the $10 million loan issued by Private Financing Alternatives, LLC to Walloon Lake Holdings, LLC. Because the security for the loan consisted of non-single-family residential real estate, the statutory usury limits did not apply. This legal distinction determines whether lenders are restricted by the 25% interest rate ceiling common in state lending regulations.
Timeline
September 29, 2023: The parties executed the $10 million promissory note.
October 6, 2026: The court issued the summary judgment ruling.
Money Landscape
This decision clarifies the scope of Michigan Compiled Laws §438.31c(11) regarding commercial lending. It reinforces established precedents that distinguish between residential and non-residential real estate collateral in high-value loan agreements.
Business owners should review the property type used as collateral to understand which interest rate protections apply to their financing. Consult with a qualified financial or tax professional to assess how specific state exemptions influence the total cost of commercial debt.
The takeaway
Commercial loan agreements are subject to specific statutory thresholds that determine interest rate protections. Business borrowers should verify their loan security status and the governing statutes before executing large-scale promissory notes.
Further reading
For broader guidance on how business loan terms and state regulations affect borrowing, review our resources on Financial Planning.
Source note: This article includes information reported by Michigan Lawyers Weekly.
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