You must consider State law when determining whether an informal loan is bona fide. The information below pertains to the laws of the states in the Boston region.

The following must be considered when determining if an informal loan is bona fide in any of the New England States:

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  Oral loan agreements may be valid in each of the New England states as long as there is mutual assent of the parties to the contract.

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  In all New England states except Connecticut, there is no upper limit on the amount of an oral loan. In Connecticut, State law since 1989 requires that any loan for more than $50,000 must be in writing.

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  In all the New England states, an agreement must be in writing if there is no possibility of performance of the agreement within one year of the making of the agreement..

SI 01120.220 Loans, Promissory Notes, and Property Agreements