# Is there a prepayment penalty on an SBA 7(a) loan?

**Short answer:** Only on loans with maturities of 15 years or more. SBA's fee is 5%, 3% and 1% of the prepaid amount in years one, two and three. It applies when you voluntarily prepay more than 25% early, under 13 CFR § 120.223. Lenders may not add their own.

Canonical page: https://www.sbaexpress.loans/answers/sba-loan-prepayment-penalty/
Last checked: 2026-11-09

Loans with a maturity under 15 years carry no SBA prepayment fee. A lender may not charge prepayment fees on any 7(a) loan (SOP 50 10 8.1, Section A, Chapter 4, Para. C.4, about p. 70).

## The Subsidy Recoupment Fee

This fee goes to SBA. The lender does not keep it. The trigger under 13 CFR § 120.223(a) is:

- a maturity of 15 years or more and voluntary prepayments over 25% of the highest principal balance in one of the first three 12-month periods

The rates are 5%, 3% and 1% of the prepaid amount in years one, two and three.

## Cases that need a closer look

- **Extended loans.** The fee can apply if a shorter loan is extended to 15 years or more during its first 36 months (Para. C.3).
- **Refinancing.** Appendix 14 says any applicable fee applies when another 7(a) lender refinances the loan.
- **Death.** SBA does not treat a prepayment resulting from death as voluntary.
- **Other involuntary payments.** The lender can ask SBA for a determination.
- **SBA Express.** The same test applies. Express lines cannot reach 15 years, so the fee can only reach a long-term Express loan.
- **Revolving Manufacturers' Access to Revolving Credit (MARC) loans.** These are exempt because they amortize over no more than 10 years (Appendix 17, Para. B.4).

## Notice before paying off

Under SBA's Note language, you may prepay 20% or less at any time without notice. If you prepay more and the loan was sold, you must give written notice and pay accrued interest. A payment arriving less than 21 days after notice owes 21 days of interest, less interest already paid (Section B, Chapter 6, Para. D.2, about p. 209).

## Sources

- [13 CFR § 120.223, Subsidy recoupment fee](https://www.ecfr.gov/current/title-13/section-120.223)
- [SOP 50 10 8.1, Sec. A, Ch. 4, Para. C.3 and C.4 (about p. 70)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [SOP 50 10 8.1, App. 14, Para. A (about p. 356)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [SOP 50 10 8.1, App. 17, Para. B.3 (p. 391) and B.4 (about p. 392)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [SOP 50 10 8.1, Sec. B, Ch. 6, Para. D.2 (about p. 209)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)