Interest on SBA loans begins to accrue as soon as the first disbursement is made. Interest accrues daily based on the outstanding principal balance of the loan. Payments are applied first to accrued interest, and if there are any funds remaining after accrued interest is paid, they will be applied to the outstanding principal balance. Therefore, it may take several months to pay the accrued interest before loan payments begin to reduce the principal balance. For more details, please refer to your Loan Authorization and Agreement.