{"ok":true,"canonical_url":"https://dealroom.so/glossary/compound","api_url":"https://dealroom.so/api/public/glossary/compound","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"compound","term":"Compound","group":"The loan itself","definition":"Compound interest means that interest is calculated not only on the initial principal but also on the accumulated interest from previous periods. This makes the total debt grow faster.","what_it_means":"While most SBA 7(a) loans have simple interest calculated on the outstanding principal, understanding compounding is crucial if you encounter any deferment periods or if interest is allowed to accrue without payment. In such cases, your total debt load can increase significantly faster than with simple interest, making eventual repayment more costly.","url":"https://dealroom.so/glossary/compound","official_sources":[],"related":[{"slug":"principal-and-interest","term":"Principal and interest","url":"https://dealroom.so/glossary/principal-and-interest"},{"slug":"variable-rate","term":"Variable rate","url":"https://dealroom.so/glossary/variable-rate"},{"slug":"interest-only-payment","term":"Interest-Only Payment","url":"https://dealroom.so/glossary/interest-only-payment"},{"slug":"debt-service","term":"Debt service","url":"https://dealroom.so/glossary/debt-service"}],"related_questions":[{"question":"For a seller note on full standby, is it permissible for the accrued interest to capitalize or compound during the SBA 7(a) loan term?","url":"https://dealroom.so/for-lenders/questions/for-a-seller-note-on-full-standby-is-it-permissible-for-the-accrued-interest-to-capitalize"}]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Compound","url":"https://dealroom.so/glossary/compound","source_type":"DealRoom Data"}}