Can my SBA loan payments follow my seasonal cash flow?
Short answer
Possibly. SOP 50 10 8.1, Appendix 18 says the amortization schedule may be adjusted to meet the business's cash flow needs. Other amortization methods need SBA's prior approval under 13 CFR § 120.214(e), and balloon payments are not allowed.
SOP 50 10 8.1, Appendix 18, AmortizationPaying a loan down on a schedule, so each payment covers interest and part of the balance. Full definition (about p. 399) says the amortization schedule may be adjusted to meet the cash flow needs of the business. It does not describe how. Whether a lender offers an uneven schedule varies by lender.
What the regulation requires
13 CFR § 120.214(e) allows certain other amortization methods with SBA's prior approval. SBA does not allow balloon payments under any of them. Any schedule must still pay the loan off by maturity.
What the SOP says about the Note
- The Note must state the repayment terms and any interest-only payment period (Section B, Chapter 6, Para. D.2, p. 207).
- A lender may not charge a fee for changing the installment after a deferment (Section A, Chapter 4, Para. C.2.b, about p. 69).
A product built for seasons
A Seasonal CAPLine is designed for this need. Disbursements come during the seasonal build-up. Principal is repaid as soon as cash from the seasonal sales comes in, and interest should be paid monthly (Section B, Chapter 4, Para. F, p. 154). An interest-only period cannot run past the seasonal cycle (Para. D.2).
What to ask your lender
Ask whether it will write a schedule around your slow months, and whether SBA must approve it. Your Note controls.
Ask lending partners about your loan
Tell us the amount you need and what it is for. We refer you to lenders that may fund businesses like yours, and it costs you nothing.
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