Glossary · The loan itself
In short
Whole life insurance provides lifelong coverage and includes a savings component that accumulates cash value over time. It's more expensive than term life insurance and generally not preferred by SBA lenders for loan collateral.
While whole life insurance builds cash value, SBA lenders typically prefer term life insurance for loan collateral because it's simpler and directly covers the loan amount for the relevant period. If you have a whole life policy, the lender might accept an assignment if its cash value is sufficient and accessible.
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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