Can an SBA loan have a 25-year amortization with a 10-year term?
Short answer
No. A 25-year schedule on a 10-year term leaves a balance due at maturity, which is a balloon. SBA does not allow balloon payments on 7(a) loans, under 13 CFR § 120.214(e).
Many conventional commercial loans pair a long amortizationPaying a loan down on a schedule, so each payment covers interest and part of the balance. Full definition with a shorter term. The remaining balance comes due at maturity, and that balance is a balloon. 13 CFR § 120.214(e) says SBA does not allow balloon payments.
How SBA ties the schedule to the maturity
SOP 50 10 8.1, Appendix 18, Amortization (about p. 399) says a fixed-rate loan must use a payment that fully amortizes it by the maturity date. Variable-rate loans are typically re-amortized at each rate change for the same reason.
Appendix 15, Para. B.1 (p. 370) states it directly for change of ownership loans. They need a stated amortization and maturity, and may not have a balloon.
What sets the length
The maximum depends on what the money buys (Appendix 17, Para. A, p. 390):
- Real estate: 25 years, plus any reasonable construction or renovation period
- Working capital and intangibles: 10 years
- Equipment: 10 years, or up to 15 years if the IRS asset class useful life supports it
So a 25-year schedule is available only where the use of proceeds supports 25 years.
Reading a term sheet
If a quote for a 7(a) loan shows a maturity shorter than its amortization, ask the lender why. It may be describing a non-SBA loan in the same financing. Your Note and the SBA Terms and Conditions control.
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