The latest news, articles, and events from the attorneys at Lerch, Early & Brewer.

Lerch Early Insights

COVID-19 Resource Center

Lerch Early is monitoring COVID-19 and its impact on our clients and communities.

As part of this effort, we're constantly working on fresh content to both inform and to meet your needs. Please check out our

COVID-19 Resource Center


Commercial Loans Secured by Personal Residences and Prepayment Penalties

Commercial Lending Bulletin

Many states have laws prohibiting prepayment penalties on non-commercial loans secured by a borrower's home. An individual borrower may obtain financing in his or her own name to use to invest in or establish a business. Because the loan is in the individual's name and secured by his or her personal residence, the loan may appear on its face to be a personal loan. In order to avoid any prohibition on collecting a prepayment penalty, it is very important for the loan documents to recite that the loan is a commercial loan and describe the purpose of the loan, e.g., to acquire a franchise or purchase a business. An even better approach is to have the business entity as the borrower and the individual proprietors as guarantors, pledging their residences as security for their guaranty of the business loan. 

This content is for your information only and is not intended to constitute legal advice. Please consult your attorney before acting on any information contained here.


Email Confirmation

Thank you for your interest in Lerch, Early & Brewer. Please be aware that unsolicited e-mails and information sent to Lerch Early though our web site will not be considered confidential, may not receive a response, and do not create an attorney-client relationship with Lerch Early Brewer. If you are not already a client of Lerch Early, do not include anything confidential or secret in this e-mail. Also, please note that our attorneys do not seek to practice law in any jurisdiction in which they are not authorized to do so.

By clicking "OK" you acknowledge that, unless you are a current client, Lerch Early does not have any obligation to maintain the confidentiality of any information you send us.