Can Text Messages Prove a Business Loan in New York?

One of the most common calls we receive goes something like this:

“I lent money to a friend, relative, or business owner. We never signed a loan agreement. But I have text messages where they keep promising to pay me back. Can I still recover the money?”

In many cases, the answer is yes. While a written promissory note is always preferable, New York courts regularly consider text messages, emails, checks, bank records, and the parties' conduct when determining whether money was intended as a loan or merely a gift.

The Problem: No Loan Documents

Many business loans begin informally. A business owner needs cash quickly. A friend, relative, investor, or business associate advances funds. Everyone expects repayment, but nobody hires a lawyer. Months later, when repayment doesn't arrive, the borrower often changes the story. What was originally described as a loan suddenly becomes an investment, a gift, or a contribution to the business. The borrower insists there was never an agreement to repay the money. At that point, many lenders assume they have no legal recourse because nothing was formally documented. That assumption is often wrong.

A Borrower's Own Text Messages Can Be Evidence

New York courts routinely look beyond formal contracts and examine what the parties said and did after the money changed hands. When a borrower sends messages stating that a particular payment will be late, asking for additional time, discussing a repayment schedule, or acknowledging an outstanding balance, those communications may serve as admissions that a debt exists. We frequently see message chains containing statements such as:

“I’m late this month, but I’ll get you next month.”

“The deal hasn’t closed yet. Once it does, I’ll pay you.”

“Can you give me another sixty days?”

“I’m working on getting the funds together.”

Messages like these are often inconsistent with a later claim that the money was a gift or an investment. A person generally does not ask for extensions on a gift.

The J.D. Case: Text Messages Defeated the "Gift" Argument

A good example is J.D. v. A.D., Jr. (Richmond Cty Sup. Ct. 2017), where a father advanced $280,000 to his daughter and son-in-law in connection with the purchase of property. The son-in-law later argued that the money was a gift and that he had no obligation to repay it. The court rejected that argument after considering both the surrounding circumstances and the parties' communications. Among the most significant evidence were text messages sent by the borrower himself. In one message, he referred to “Borrowing $280,000.” In another, he discussed the need to “pay back your dad” within the agreed timeframe. Those statements were difficult to reconcile with his litigation position that the funds had been gifted. The court ultimately concluded that the transaction was a loan and entered judgment in favor of the father.

The Saadeh Case: Repeated Assurances Can Create Liability

Another instructive example is Saadeh v. Kagan (SDNY 2023). There, the lender sought recovery of a six-figure loan after years of repayment discussions. Although the case involved extensive email correspondence rather than text messages, the principle is the same. The court focused heavily on repeated communications in which the person communicating with the lender acknowledged responsibility for repayment and repeatedly assured the lender that payment would be forthcoming. The emails included statements that repayment of the debt was “truly my obligation,” requests for additional time, explanations regarding cash-flow difficulties, and repeated updates concerning efforts to obtain financing that would permit repayment. The court found that these communications could give rise to liability under a promissory estoppel theory because the lender reasonably relied on those assurances and delayed taking legal action.

What Evidence Helps Prove an Informal Business Loan?

When evaluating these cases, courts typically look at the entire course of dealings between the parties. Bank transfers, canceled checks, wire confirmations, emails, text messages, and other communications can all become relevant. Messages discussing repayment schedules, missed payments, extensions, outstanding balances, or future plans for repayment are often particularly important because they may demonstrate that both sides understood the money was expected to be returned. Courts also frequently consider whether any partial payments were made, whether the recipient used the funds for a business purpose, and whether the parties' conduct after the transfer was consistent with a loan rather than a gift or investment. A case supported by multiple forms of evidence is generally far stronger than one that relies solely on competing recollections years after the fact.

If you need help drafting, reviewing, or enforcing a loan, give us a call today.