Key takeaways
- Step-down: 5/4/3/2/1% typical.
- Yield maintenance: punishing.
- Defeasance: complex + expensive.
- Negotiate down at origination.
- Plan exits around PPP windows.
Core concepts
Step-down
Decreasing penalty by year.
Yield maintenance
Make lender whole on lost yield.
Defeasance
Buy Treasuries to replace cash flow.
Step-by-step framework
- 1Read PPP carefully.
- 2Negotiate at origination.
- 3Plan exit around PPP.
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Common mistakes to avoid
- Accepting standard PPP without negotiation.
Frequently asked questions
Best PPP?
Step-down.
Worst?
Defeasance.
Negotiable?
Yes at origination.
Refi cost?
PPP + closing.
Action checklist
- ☐PPP type identified.
- ☐Cost computed.
- ☐Exit aligned.
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