Glossary · The loan itself
Deferred Principal Payment
In short
This arrangement allows you to postpone making principal payments on your loan for a set period. You typically still pay interest during this deferment.
What it means in a deal
An SBA loan might include a deferment period, allowing you to delay principal payments for a few months post-closing. This can provide crucial breathing room for your business to stabilize and generate cash flow. Always confirm the exact terms and duration with your lender.
Official sources
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Deferred Principal Payment
- If a seller note is structured with deferred principal payments but immediate interest payments, does it still qualify as full standby?
- What specific conditions allow a seller note with deferred principal payments but immediate interest to qualify as full standby?
- If a seller note has deferred principal payments but pays interest from day one, does it qualify as full standby?
- Can a seller note with deferred payments but no interest count as full standby for equity injection?
- How does the SBA handle a short-term deferral of principal payments at the start?
- Can a seller note be subordinate to the SBA loan but still receive principal payments?
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 2026-06-15 · 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.
See which SBA lenders would fund your deal
Tell us the business, the price, and where you are — we'll point you to the lenders most likely to approve a 7(a) like yours and flag what trips up approval.
Free · No documents · Usually same-day
Backed by data on 1,000+ SBA lenders and 300,000+ funded deals. Your details go only to lending partners you ask to be matched with — never sold to advertisers.