Glossary · The loan itself
In short
A requirement for key principals to assign a life insurance policy to the lender. It protects the lender if the principal dies before the loan is repaid, ensuring the loan gets paid off.
For SBA 7(a) loans, if you're a key principal (e.g., 20%+ owner), the lender will require you to get a life insurance policy or assign an existing one. The lender is the beneficiary up to the loan amount, so if something happens to you, the loan gets paid off. Make sure the policy covers the full loan term and value.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
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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