Title: A Step-by-Step Guide to Making SBA Payments  | The Blueprint
Headings: Should You Pay Off an SBA Loan Early?
Should You Pay Off an SBA Loan Early?
Why would you prepay an SBA loan?
3 considerations before making an SBA prepayment
1. What is your interest rate savings?
2. What will your cash position look like?
3. What are your new covenants?
How to make an SBA prepayment
1. Engage your new lender
2. Get a payoff statement from your existing lender
3. Make the payment
To pay or not to pay
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Content: If you’re one of those business owners who wants to avoid leverage and you want to pay your loan off as soon as possible, make sure you consider your cash position and opportunity cost. Opportunity cost is easy. If you can put cash into paying off this loan, which has a 6% interest rate, or into equipment, which will have an ROI of 15% per year, you should obviously put it into the equipment. Cash is a little different. Only you know what the right amount of cash is for your business. Some owners distribute everything at the end of the year. Some want to have a year’s worth of expenses on hand. Refinancing is a different story. You can likely finance any fees, so you don’t need to worry about cash into the deal. The amount of cash you can pull out of the property with a new loan should be part of your decision.