On March 6, 2024, the Second Department issued a decision in Alleon Capital Partners v. Choudhry, 2024 NY Slip Op. 01165, holding that the usury law did not apply to a loan with a principal amount over $2.5 million, explaining:
General Obligations Law § 5-501(2) provides that no person or corporation shall, directly or indirectly, charge, take or receive any money, goods or things in action as interest on the loan or forbearance of any money, goods or things in action at a rate exceeding the maximum permissible interest rate. Under General Obligations Law § 5-521(1), the defense of usury is not available to corporations, but this bar does not preclude a corporate borrower from raising the defense of criminal usury (i.e., interest over 25%) in a civil action. However, civil and criminal usury laws do not apply to any loan or forbearance in the amount of $2,500,000 or more.
Here, the Supreme Court properly determined that usury laws do not apply to the subject loan since the parties agreed to a principal loan of more than $2,500,000. Contrary to the appellants’ contention, the portion of the loan that was used to cover closing fees, attorney fees, and taxes did not lower the agreed-upon amount of the loan below the $2,500,000 threshold in this instance.
(Internal quotations and citations omitted).