Glossary · The loan itself
Loan principal
In short
The loan principal is the initial amount of money borrowed, excluding any interest or fees. Your monthly payments primarily go towards reducing this principal amount, plus accrued interest.
What it means in a deal
Understanding how payments reduce your loan principal is crucial. Early payments are heavily weighted towards interest, while later payments reduce principal faster. This impacts your equity build-up in the business and your total cost of borrowing over the loan maturity.
Related terms
Common questions about Loan principal
- What happens to an SBA loan if a principal owner or guarantor dies unexpectedly?
- Can a seller note be subordinate to the SBA loan but still receive principal payments?
- What is the minimum ownership percentage requiring a personal guarantee from a 7(a) loan principal?
- What constitutes a 'serious criminal offense' that may cause 7(a) loan ineligibility for a principal?
- Under what circumstances can a lender waive a required personal guaranty for a 7(a) loan principal?
- What if a principal has a recent criminal history that is not a felony?
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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