Glossary · The loan itself
Balloon payment
In short
A large lump sum due at the end of some loans. SBA 7(a) loans never have one; many seller notes do — read yours.
What it means in a deal
Balloon payments are common on seller notes, where the seller may agree to low or zero monthly payments but wants the full remaining balance paid at a specific date — often three to five years out. SBA 7(a) loans don't have balloons, which is one reason buyers prefer them. If your deal includes a seller note with a balloon, model what happens if the business can't generate the lump sum at maturity.
Related terms
Common questions about Balloon payment
- What counts as "my own money" for the down payment?
- Can an investor fund my SBA 7(a) down payment?
- Is my equity injection (down payment) always required to be cash?
- What if my down payment funds are transferred from an international account?
- Can a credit card cash advance be used for my down payment?
- Does a loan from a relative count towards my required down payment?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-16 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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