Glossary · The loan itself
In short
This occurs when an insurance policy terminates due to unpaid premiums. If your required life insurance policy lapses, it violates your SBA loan agreement.
An SBA loan typically requires key person life insurance for a specified period. A policy lapse means the collateral is gone, putting you in default. Set up automatic payments and regularly confirm your policy is active to avoid this serious issue.
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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