{"ok":true,"canonical_url":"https://dealroom.so/glossary/principal-deferral","api_url":"https://dealroom.so/api/public/glossary/principal-deferral","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":"principal-deferral","term":"Principal Deferral","group":"The loan itself","definition":"A temporary period during which a borrower only pays interest on a loan, with no payments made towards the principal balance.","what_it_means":"In some 7(a) loan structures, particularly for startups or businesses needing time to ramp up, a short period of principal deferral might be negotiated. This can ease initial cash flow pressure. However, interest still accrues, and the principal payments will eventually begin, often resulting in slightly higher payments later or a longer amortization period.","url":"https://dealroom.so/glossary/principal-deferral","official_sources":[],"related":[{"slug":"amortization","term":"Amortization","url":"https://dealroom.so/glossary/amortization"},{"slug":"interest-only-payment","term":"Interest-Only Payment","url":"https://dealroom.so/glossary/interest-only-payment"},{"slug":"deferment-period","term":"Deferment Period","url":"https://dealroom.so/glossary/deferment-period"},{"slug":"cash-flow","term":"Cash flow","url":"https://dealroom.so/glossary/cash-flow"}],"related_questions":[{"question":"How does the SBA handle a short-term deferral of principal payments at the start?","url":"https://dealroom.so/sba-7a/questions/how-does-the-sba-handle-a-short-term-deferral-of-principal-payments-at-the-start"},{"question":"What happens to an SBA loan if a principal owner or guarantor dies unexpectedly?","url":"https://dealroom.so/sba-7a/questions/what-happens-to-an-sba-loan-if-a-principal-owner-or-guarantor-dies-unexpectedly"},{"question":"What if a principal has a recent criminal history that is not a felony?","url":"https://dealroom.so/for-lenders/questions/what-if-a-principal-has-a-recent-criminal-history-that-is-not-a-felony"},{"question":"If a seller note is on full standby, when can the principal repayments legally begin?","url":"https://dealroom.so/sba-7a/questions/if-a-seller-note-is-on-full-standby-when-can-the-principal-repayments-legally-begin"},{"question":"Can a seller note be subordinate to the SBA loan but still receive principal payments?","url":"https://dealroom.so/sba-7a/questions/can-a-seller-note-be-subordinate-to-the-sba-loan-but-still-receive-principal-payments"},{"question":"What is the required personal ownership percentage to be considered a 'principal' by the SBA?","url":"https://dealroom.so/sba-loans/basics/what-is-the-required-personal-ownership-percentage-to-be-considered-a-principal-by-the-sba"}]},"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 — Principal Deferral","url":"https://dealroom.so/glossary/principal-deferral","source_type":"DealRoom Data"}}