SBA 7(a) Prepayment Penalty Forecaster

Quantify the SBA 7(a) prepayment penalty for loans over 15 years old, add subsidy recapture fees, and contrast the upfront cost with the annual and lifetime savings produced by refinancing into a lower rate.

Principal balance you intend to refinance or pay off in full.
Use decimal years to reflect the age of the loan at payoff (e.g., 2.5 years).
Difference between your current SBA rate and the refinance offer in percentage points.
Defaults to 20 years if blank to approximate standard long-term SBA structures.
Defaults to remaining term plus years elapsed. Loans with original terms ≤15 years incur no SBA penalty.
Defaults to $0 if blank; include subsidy recapture, legal, or third-party fees.

Outputs are illustrative. Confirm penalty terms with your lender and model amortization schedules for precise savings before refinancing.

Examples

  • Prepay $650,000, 2.2 years since disbursement, rate drop 2.75 pts, 20 years remaining, $3,000 recapture ⇒ Penalty at 1.00% is $6,500.00 plus $3,000.00 in recapture, for $9,500.00 total upfront cost. A 2.75% rate drop saves about $1,489.58 per month and $17,875.00 per year, delivering $357,500.00 over the remaining 20.0 years. Breakeven arrives after 7 months (0.6 years), leaving a net benefit of $348,000.00 versus staying in the SBA loan.
  • Prepay $420,000, 0.8 years since disbursement, rate drop 1.50 pts, 23 years remaining, no recapture ⇒ Penalty at 5.00% is $21,000.00 plus $0.00 in recapture, for $21,000.00 total upfront cost. A 1.50% rate drop saves about $525.00 per month and $6,300.00 per year, delivering $144,900.00 over the remaining 23.0 years. Breakeven arrives after 40 months (3.3 years), leaving a net benefit of $123,900.00 versus staying in the SBA loan.

FAQ

What if my loan term was 10 years?

Loans with original maturities of 15 years or less do not trigger the SBA prepayment penalty, so the calculator will display a 0% penalty tier.

How is subsidy recapture handled?

Add subsidy recapture, legal, or third-party fees in the optional field. They are added to the penalty to show your full upfront cost before refinancing.

Does the calculator adjust for partial prepayments?

Yes. Enter only the principal you intend to prepay—the penalty and savings scale directly with that amount.

Additional Information

  • Penalty tiers follow SBA 7(a) guidance for loans with original maturities greater than 15 years: 5% in year one, 3% in year two, 1% in year three, and 0% thereafter.
  • Rate savings are approximated using the drop in interest rate multiplied by the current outstanding balance; actual amortized savings will vary as the principal amortizes.
  • Breakeven timing divides the total penalty by monthly savings so borrowers can judge when refinancing produces a positive payoff.

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