For SBA lenders
Short answer
A waiver may be considered in rare instances where the principal is uninsurable or if the business has substantial liquid assets or multiple key principals, adequately mitigating the risk of loss.
While generally required, the life insurance requirement can be waived if the lender can document compelling reasons, such as the principal being medically uninsurable at a reasonable cost, or if the business demonstrates strong financial capacity or has other key principals whose absence would not jeopardize repayment. The SBA's expectation is primarily risk mitigation.
The 50% owner of a highly profitable business with significant cash reserves and three other key managers (each owning 25%) applies for a 7(a) loan. The 50% owner is terminally ill and uninsurable. The lender may request a waiver, citing the business's financial strength and other key personnel.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
Standard 7(a) Authorization File Library
Last checked 2026-06-13. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-13 · SBA sources checked through 2026-06-13. DealRoom analysis of public SBA 7(a) lending records (FY2020–present). Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
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