{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/when-is-a-lender-permitted-to-request-a-prepayment-penalty-on-a-7-a-loan-that-is-repaid-ea","api_url":"https://dealroom.so/api/public/questions/when-is-a-lender-permitted-to-request-a-prepayment-penalty-on-a-7-a-loan-that-is-repaid-ea","question":"When is a lender permitted to request a prepayment penalty on a 7(a) loan that is repaid early?","topic":"Guaranty fees","audience":"lender","bot_mode":"lender","short_answer":"A lender is permitted to request a prepayment penalty on 7(a) loans with maturities of 15 years or more, if the loan amount is greater than $50,000 and it is prepaid within the first three years.","rule":"SBA rules allow for prepayment penalties on 7(a) loans to compensate lenders for lost interest income on longer-term loans paid off early. This penalty applies only to loans with a maturity of 15 years or more, where the original loan amount exceeds $50,000, and only if the loan is prepaid within the first three years after disbursement. The penalty is calculated as a declining percentage of the outstanding principal (5% in year 1, 3% in year 2, 1% in year 3).","example":"A borrower repays a $200,000 7(a) loan with a 20-year term exactly 18 months after disbursement. Since the loan is over $50,000 and has a term over 15 years, the lender can charge a 3% prepayment penalty on the outstanding principal at the time of repayment.","what_lenders_check":"Lenders must correctly apply the prepayment penalty rules, ensuring the loan meets the criteria and the penalty is calculated accurately. Improperly assessing or failing to assess an allowable penalty can lead to SBA scrutiny.","required_facts":["Loan maturity (15+ years)","Loan amount (>$50,000)","Repayment within 3 years","Declining penalty percentage","Outstanding principal"],"source_families":["SOP 50 10 - Lender and Development Company Loan Programs","7(a) Loan Program Terms, Conditions, and Eligibility","13 CFR Part 120 - Business Loans"],"official_sources":[{"title":"SOP 50 10 - Lender and Development Company Loan Programs","url":"https://www.sba.gov/sites/default/files/2025-05/SOP%2050%2010%208%20Technical%20Updates%20effective%206.1.2025.docx"},{"title":"7(a) Loan Program Terms, Conditions, and Eligibility","url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility"},{"title":"13 CFR Part 120 - Business Loans","url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120"}],"related_questions":[{"question":"How is the upfront guaranty fee calculated for a 7(a) loan of $500,000 for FY2026?","url":"https://dealroom.so/for-lenders/questions/how-is-the-upfront-guaranty-fee-calculated-for-a-7-a-loan-of-500-000-for-fy2026"},{"question":"What is the process for a lender to remit the SBA upfront guaranty fee after loan closing?","url":"https://dealroom.so/for-lenders/questions/what-is-the-process-for-a-lender-to-remit-the-sba-upfront-guaranty-fee-after-loan-closing"},{"question":"How does the SBA calculate the 7(a) loan guaranty fee when the loan amount is precisely $1,000,000 for FY2026?","url":"https://dealroom.so/for-lenders/questions/how-does-the-sba-calculate-the-7-a-loan-guaranty-fee-when-the-loan-amount-is-precisely-1-0"},{"question":"When is the ongoing SBA servicing fee (annual service fee) for a 7(a) loan typically collected from the lender?","url":"https://dealroom.so/for-lenders/questions/when-is-the-ongoing-sba-servicing-fee-annual-service-fee-for-a-7-a-loan-typically-collecte"},{"question":"How do the upfront SBA guaranty fees differ for 7(a) loans between $150,001 and $700,000 for FY2026?","url":"https://dealroom.so/for-lenders/questions/how-do-the-upfront-sba-guaranty-fees-differ-for-7-a-loans-between-150-001-and-700-000-for-"},{"question":"How do the ongoing annual service fees for 7(a) loans impact the lender's accounting and remittance to SBA?","url":"https://dealroom.so/for-lenders/questions/how-do-the-ongoing-annual-service-fees-for-7-a-loans-impact-the-lender-s-accounting-and-re"}],"related_terms":[{"term":"Prepayment penalty","url":"https://dealroom.so/glossary/prepayment-penalty"},{"term":"7(a) loan","url":"https://dealroom.so/glossary/7a-loan"},{"term":"Tiered prepayment penalty","url":"https://dealroom.so/glossary/tiered-prepayment-penalty"},{"term":"Standard 7(a) loan","url":"https://dealroom.so/glossary/standard-7-a-loan"},{"term":"SBA 7(a) loan","url":"https://dealroom.so/glossary/sba-7-a-loan"},{"term":"7(a) Small Loan","url":"https://dealroom.so/glossary/7-a-small-loan"}],"related_tools":[{"name":"SBA 7(a) payment & fee calculator","url":"https://dealroom.so/sba-7a/calculator"},{"name":"Find an active SBA 7(a) lender","url":"https://dealroom.so/lenders"}],"data_freshness":{"last_reviewed":"2026-06-13","sba_rule_sources_checked_through":"2026-06-13"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/for-lenders/questions/when-is-a-lender-permitted-to-request-a-prepayment-penalty-on-a-7-a-loan-that-is-repaid-ea","source_type":"DealRoom Q&A"},"caveats":["Grounded in the current SBA rulebook; verify against official sources before relying on it for a live deal.","Not legal, tax, or financial advice and not an approval decision."]}