Glossary · The loan itself
In short
This type of life insurance provides coverage for a specific period (the term), paying a death benefit if the insured dies within that term. It's often required by SBA lenders to protect the loan.
For 7(a) loans, the SBA often requires the buyer (key principal) to carry term life insurance with an assignment to the lender. This ensures the loan can be repaid if something happens to you. The policy typically covers the loan principal for the duration of the loan.
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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