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Glossary

Prepayment penalty

A charge for paying off early, applying to 7(a) loans with terms of 15 years or more and declining over the first three years.

Why it matters to you

Matters if you might sell the business or refinance. On a ten-year loan it generally doesn't apply at all — which is one genuine advantage of the shorter term that nobody mentions when they're selling you a twenty-five-year amortisation.

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