In the case of a loan, it is a whole or partial repayment of the loan before the maturity date set out in the loan agreement. Loan agreements typically include optional prepayment provisions (where the borrower may voluntarily make a loan prepayment) and mandatory prepayment provisions (where the borrower is required to make a loan prepayment in a certain amount on the occurrence of specified events. For example the borrower may be required to prepay the loans with a specified percentage of its excess cash flow).

For more information on prepayments, see Practice Note, Loan Agreement: Prepayment and Commitment Reduction Provisions and Standard Clauses, Loan Agreement: Prepayment and Commitment Reduction Provisions.