Glossary · Doing the deal
In short
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.
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.
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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