{"ok":true,"canonical_url":"https://dealroom.so/glossary/prepayment-penalty","api_url":"https://dealroom.so/api/public/glossary/prepayment-penalty","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":"prepayment-penalty","term":"Prepayment penalty","group":"The loan itself","definition":"A prepayment penalty is a fee charged if you pay off your SBA 7(a) loan early. This protects the lender from losing interest income if you refinance or sell the business sooner than expected.","what_it_means":"For SBA 7(a) loans over $50,000 with terms of 15 years or more, a prepayment penalty applies if you pay off 25% or more of the outstanding principal during the first three years. The penalty decreases over these three years. Factor this into any future plans to sell or refinance, as it can be a significant cost.","url":"https://dealroom.so/glossary/prepayment-penalty","official_sources":[{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"},{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"term-maturity","term":"Term / maturity","url":"https://dealroom.so/glossary/term-maturity"},{"slug":"amortization","term":"Amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"loan-agreement","term":"Loan agreement","url":"https://dealroom.so/glossary/loan-agreement"}],"related_questions":[{"question":"What triggers the application of the SBA 7(a) loan prepayment penalty?","url":"https://dealroom.so/for-lenders/questions/what-triggers-the-application-of-the-sba-7-a-loan-prepayment-penalty"},{"question":"Are there specific loan sizes for which the prepayment penalty does not apply?","url":"https://dealroom.so/sba-7a/questions/are-there-specific-loan-sizes-for-which-the-prepayment-penalty-does-not-apply"},{"question":"Will I pay a prepayment penalty if I repay my SBA 7(a) loan early?","url":"https://dealroom.so/sba-7a/questions/will-i-pay-a-prepayment-penalty-if-i-repay-my-sba-7-a-loan-early"},{"question":"What is the maximum prepayment penalty that can apply to an SBA 7(a) loan?","url":"https://dealroom.so/sba-7a/questions/what-is-the-maximum-prepayment-penalty-that-can-apply-to-an-sba-7-a-loan"},{"question":"Under what specific conditions does the SBA impose a prepayment penalty on 7(a) loans?","url":"https://dealroom.so/sba-7a/questions/under-what-specific-conditions-does-the-sba-impose-a-prepayment-penalty-on-7-a-loans"},{"question":"Does an SBA 7(a) loan have a prepayment penalty if I pay it back early?","url":"https://dealroom.so/sba-loans/basics/does-an-sba-7-a-loan-have-a-prepayment-penalty-if-i-pay-it-back-early"}]},"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 — Prepayment penalty","url":"https://dealroom.so/glossary/prepayment-penalty","source_type":"DealRoom Data"}}