SBA 7(a) Q&A
Short answer
The underwriting timeline for business life insurance can significantly impact loan closing schedules, as it often requires a medical exam and can take several weeks or even months to complete.
Life insurance underwriting involves collecting medical records, scheduling exams, and assessing risk, which is a process that can be unpredictable in length. If a loan closing is contingent on a life insurance policy being in force (e.g., for collateral assignment), delays in underwriting can push back the entire closing process.
An SBA loan for an acquisition is set to close in 60 days, but the lender requires a $500,000 life insurance policy on the buyer. If the medical exam results are delayed or require further investigation, the loan closing might be postponed until the policy is issued.
Last reviewed 2026-06-15 · SBA sources checked through 2026-06-15. DealRoom analysis of business life-insurance and SBA collateral-insurance practice (SOP 50 10 8). Not insurance, legal, or tax advice. Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
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