What is the legal limit on interest rate (over Federal Reserve rate) for private loan

[Courtney Nguyen]

Hi BP community,

So I heard interest rate on private loan can only be 10% over Federal Reserve rate, is that true?

For example, as of now 3/20/2023 the Federal Reserve interest rate is 4.5% - 4.75%. Let say our holding LLC is borrowing money from the parent LLC to buy a house so we need to determine that interest rate for the loan. Looks like we can't just come up with any rate we want, but in this case it should only be between 4.95% - 5.225%, correct?

Thanks in advance for any tips/feedback.