Calculator
What will it cost to pay this off early?
Three things people get wrong about this, and each one costs money. A ten-year loan has no penalty at all.
The penalty only exists on terms of 15 years or more.
Cost of repaying, by year
Three things people get wrong here. The penalty applies only to terms of 15 years or more — a ten-year loan has none at all. It lasts three years, not the life of the loan. And the first 25% of the balance each year is exempt, so partial paydowns are often free.
Why this matters when you choose a term
If there is any chance you will sell the business or refinance inside three years, a 25-year term is not just more interest — it is a lock. Weigh that against the extra borrowing capacity a longer term buys you.
Common questions
Do SBA 7(a) loans have a prepayment penalty?
Only some. A prepayment fee applies to 7(a) loans with a term of 15 years or more, and only in the first three years, and only if you prepay 25% or more of the balance in a year. Most shorter working-capital and acquisition loans have no prepayment penalty.
How much is the SBA 7(a) prepayment penalty?
For loans it applies to: 5% of the prepaid amount in year one, 3% in year two, and 1% in year three — then nothing. This tool works out the exact cost for your balance and timing.
Does a 504 loan have a prepayment penalty?
Yes. The CDC portion of a 504 carries a declining prepayment penalty over roughly the first half of the loan’s term, tied to the debenture rate. It is structured differently from the 7(a) fee above.
Read the guide
Want the rules behind this calculator? SBA loan prepayment penalty walks through it in plain English — the SBA requirements, the data, and what lenders actually look for.