In by Key Commercial Capital

Amortization is an accounting term that refers to the repayment of loan principal over time.

Company XYZ has a $10 million loan outstanding. If Company XYZ repays $500,000 of that principal every year, we would say that $500,000 of the loan has amortized each year.

SBA Loans are typically fully amortized
Fully amortizing payment refers to a periodic loan payment, where if the borrower makes payments according to the loan’s amortization schedule, the loan is fully paid-off by the end of its set term. If the loan is a fixed-rate loan, each fully amortizing payment is an equal dollar amount. If the loan is an adjustable-rate loan, the fully amortizing payment changes as the interest rate on the loan changes.