An SBA 504 loan must be prepaid on the third Thursday of the month. If the loan is pre-paying in the first half of its term, the prepayment penalty will be included. The prepayment penalty schedule is determined when the loan is priced and funded and is based on the Debenture Rate. In the first year, the penalty is calculated by multiplying the debenture rate by the outstanding balance. The rate decreases by 1/10 each year for a 20 year debenture and by 1/5 each year for a 10 year debenture, until it reaches zero. The loan can be prepaid without penalty during the second half of the term.
If you are interested in prepaying your SBA 504 loan, please contact us and we will be happy to assist you through the entire process.