Glossary · The loan itself
In short
A life insurance policy on the borrower or key principal, assigned to the lender. It protects the lender if a key person dies before the loan is fully repaid, ensuring the loan is covered.
If you are a key principal, the lender will require a life insurance policy equal to the outstanding loan balance for a portion of the loan term. This is a non-negotiable requirement to protect the SBA guaranty. Budget for the premiums as part of your ongoing operating costs.
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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