New York Convertible Promissory Note Overview
A convertible promissory note in New York is a debt instrument commonly used in startup financing that converts into equity upon a triggering event. As a security, it must comply with both federal regulations (SEC Rule 506 under Regulation D) and New York's state securities laws. The primary state exemption is: GBL Article 23-A exemption.
New York requires Form D filing required when issuing convertible notes. The state provides strongest protections for note holders through its securities regulatory framework. The interest rate must comply with New York's 16% usury limit, though most convertible note rates (2-8%) fall well below this threshold. Companies should work with an attorney familiar with New York securities law to ensure full compliance.
Available
Securities exemption
Required
SOS filing
16%
Usury rate
Strongest
Investor protections
New York Requirements
New York has specific requirements for convertible promissory notes that both parties should understand before entering into the agreement.
- Interest Rate: Must not exceed New York's usury limit of 16%
- Written Agreement: Must be in writing and signed by the borrower (maker)
- Clear Terms: Principal amount, interest rate, payment schedule, and maturity date must be clearly stated
- Default Terms: Late fees, grace periods, and acceleration clause must comply with New York law
- Governing Law: The note should specify New York as the governing jurisdiction
How to Create a New York Convertible Promissory Note
Follow these steps to create a New York-compliant convertible promissory note using our template.
Enter Party Information
Provide the full legal names and New York addresses of both the lender (payee) and borrower (maker). Include the date the note is being executed.
Define Loan Terms
Specify the principal amount, interest rate (within New York's 16% usury limit), payment schedule, and maturity date. Our template calculates the payment breakdown automatically.
Set Default and Late Payment Terms
Define the grace period, late fee amount, acceleration clause triggers, and notice requirements. Our New York template includes compliant default language.
Sign and Execute
The borrower must sign and date the note. Consider notarization for added legal protection. Both parties should retain a copy. If secured by collateral, file the appropriate security instrument with New York's recording office.
Securities Compliance in New York
When issuing convertible promissory notes in New York, you must comply with the state securities exemption (GBL Article 23-A exemption), file the required Form D filing required, ensure the interest rate stays within the 16% usury limit, and follow New York's investor protection requirements (strongest protections). Federal Form D must be filed with the SEC within 15 days of the first sale. Our New York-specific template ensures compliance with both state and federal securities regulations.
New York Usury Warning
New York's usury limit is 16%. Charging interest above this rate can render your promissory note unenforceable and may subject the lender to penalties under New York law. Our template automatically validates your interest rate against New York's current limits.
New York Convertible Promissory Note FAQ
Answers to common questions about convertible promissory notes in New York.
Official New York Resources
Use these official resources to verify New York requirements for your convertible promissory note.
Other New York Promissory Note Types
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Create your New York Convertible Promissory Note in under 5 minutes.
Answer a few questions and download a New York-compliant document, ready for the state agency.