Pre-payment Process

Any SBA 504 loan can be prepaid on the third Thursday of any month. The payoff amount must include all monthly payments, minus the CDC fee, up to and including the payment due on the bond payment date. In addition, if the loan is paying off before the end of the first half of its term (i.e. within the first 5 years for a 10-year loan, or within the first 10 years for a 20-year loan) a prepayment penalty amount will also be due. The prepayment penalty schedule is determined when the loan is priced and funded. The penalty fee is highest in the first year and then declines evenly for the first half of the loan term (i.e. 20% each year for a 10-year loan and 10% year for a 20-year loan) until it reaches zero. Thereafter, the loan can be prepaid in any month without penalty. The initial prepayment penalty is determined by the base debenture rate, approximately 2% less than the loan’s effective interest rate.

Debentures for all loans have semi-annual payment dates. Although a loan may be paid off in any month, the payoff amount must include all monthly payments, minus the CDC fee, up to and including the payment due on the loan’s debenture bond payment date.

Please notify OSDC, in writing, of any intentions to prepay no later than 30 days before the prepayment date.

Note: Ohio 166 Regional loans can be prepaid at anytime without penalty.