Balloon Payment
Category: finance
A large, lump-sum payment due at the maturity date of a commercial loan.
Common in commercial lending where the amortization period is longer than the actual term of the loan. For example, a loan might have a 5-year term with payments calculated on a 25-year schedule; at the end of year 5, the remaining balance is due all at once as a balloon payment.
Common Examples
- We are coordinating a refinancing package to cover the $800,000 balloon payment due on our corporate headquarters property next quarter.
- Failing to plan for an upcoming balloon payment introduces extreme default risks if credit markets tighten unexpectedly.