Glossary · Doing the deal
In short
This is when a policyholder transfers their rights in a life insurance policy to a lender as collateral. For an SBA loan, it secures the loan against the death of a key person.
If you or another key principal is required to have life insurance for the SBA loan, you'll sign an Assignment of policy form. This gives the lender the right to collect the policy proceeds if the insured dies, ensuring the loan can be repaid. Make sure the policy is correctly assigned before closing.
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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