Glossary · Doing the deal
In short
A policy on you, payable to the lender. Required when the business depends on you and collateral falls short of the loan.
When the lender requires life insurance as part of the loan conditions, you assign the policy to them as beneficiary up to the outstanding loan balance. If you die, the lender collects first; any remaining benefit goes to your estate. Lenders typically require the policy be in place before closing, so start the application early — underwriting can take four to six weeks. Term life is the standard choice: match the policy term to the loan term.
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-14. 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 2026-06-14 · 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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