Glossary · The loan itself
Interest-Only Payment
In short
This is a loan payment where you only pay the interest owed, not any principal. It lowers your monthly payments temporarily but doesn't reduce your loan balance.
What it means in a deal
Some SBA loans offer an initial period of interest-only payments, usually at the start of the loan. This can help with cash flow during the transition or ramp-up phase of your new business. Understand the total impact on your loan amortization and overall cost.
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 Interest-Only Payment
- Under what specific circumstances can a lender approve an interest-only payment period for a 7(a) loan without prior SBA approval?
- Can an SBA 7(a) loan be approved if the seller's note allows interest-only payments for the first year?
- Can I use a seller note that pays interest only for the first two years towards my equity injection?
- What happens if the seller's note is only partially on standby, with some payments allowed?
- If a seller note is structured with deferred principal payments but immediate interest payments, does it still qualify as full standby?
- Can a partial standby seller note include a provision for interest payments during the standby period?
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.
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