Glossary · Doing the deal
In short
This is when you formally transfer ownership of a life insurance policy to the lender as collateral for your SBA loan. It ensures the lender gets paid if something happens to you, the key person.
For 7(a) loans, the SBA requires life insurance on key principals if the loan's repayment is dependent on their management. You'll sign an "assignment of policy" form, making the lender the primary beneficiary up to the loan amount. This protects the lender's interest.
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Defined by DealRoom.so SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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