Glossary · The loan itself
In short
The loan principal is the initial amount of money borrowed, excluding any interest or fees. Your monthly payments primarily go towards reducing this principal amount, plus accrued interest.
Understanding how payments reduce your loan principal is crucial. Early payments are heavily weighted towards interest, while later payments reduce principal faster. This impacts your equity build-up in the business and your total cost of borrowing over the loan maturity.
Defined by DealRoom.so SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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