Glossary · The loan itself
In short
This is when a life insurance policy is assigned to the lender as additional collateral for an SBA loan. It ensures the loan can be repaid if a key principal dies.
For 7(a) loans, the SBA requires life insurance on key principals, assigned to the lender, for the loan's outstanding balance. You'll need to secure a policy or assign an existing one. This protects the lender and ensures the business can continue operating without the debt burden if tragedy strikes.
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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