{"ok":true,"canonical_url":"https://dealroom.so/glossary/collateral-assignment","api_url":"https://dealroom.so/api/public/glossary/collateral-assignment","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"collateral-assignment","term":"Collateral assignment","group":"Doing the deal","definition":"The legal transfer of rights to an asset, such as a life insurance policy, from you to the lender, to serve as collateral for the loan. The lender only gets these rights if you default.","what_it_means":"For SBA 7(a) loans, particularly if there's a collateral shortfall, your lender will often require a collateral assignment of a life insurance policy on you, the borrower, or other key principals. This ensures the lender can recover losses if the business fails and you pass away.","url":"https://dealroom.so/glossary/collateral-assignment","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"life-insurance","term":"Life insurance","url":"https://dealroom.so/glossary/life-insurance"},{"slug":"life-insurance-assignment","term":"Life insurance assignment","url":"https://dealroom.so/glossary/life-insurance-assignment"},{"slug":"collateral","term":"Collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"collateral-shortfall","term":"Collateral shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"}],"related_questions":[{"question":"How does a collateral assignment of life insurance protect a lender?","url":"https://dealroom.so/sba-7a/questions/how-does-a-collateral-assignment-of-life-insurance-protect-a-lender"},{"question":"What is the difference between collateral assignment and naming a lender beneficiary?","url":"https://dealroom.so/sba-7a/questions/what-is-the-difference-between-collateral-assignment-and-naming-a-lender-beneficiary"},{"question":"When does the SBA typically mandate collateral assignment of life insurance for a business loan?","url":"https://dealroom.so/sba-7a/questions/when-does-the-sba-typically-mandate-collateral-assignment-of-life-insurance-for-a-business"},{"question":"What are the specific requirements for life insurance collateral assignment when multiple key principals exist?","url":"https://dealroom.so/for-lenders/questions/what-are-the-specific-requirements-for-life-insurance-collateral-assignment-when-multiple-"},{"question":"How does a lender ensure proper collateral assignment of life insurance on multiple key principals?","url":"https://dealroom.so/for-lenders/questions/how-does-a-lender-ensure-proper-collateral-assignment-of-life-insurance-on-multiple-key-pr"},{"question":"When is life insurance collateral assignment required for key principals in an acquisition, and for whom?","url":"https://dealroom.so/sba-7a/questions/when-is-life-insurance-collateral-assignment-required-for-key-principals-in-an-acquisition"}]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Collateral assignment","url":"https://dealroom.so/glossary/collateral-assignment","source_type":"DealRoom Data"}}