SBA 7(a) Q&A
Short answer
When a business has multiple key owners, individual policies are typically taken out on each owner, either by the business itself or by the other owners, depending on the purpose.
For key-person protection, the business usually owns a policy on each owner and is the beneficiary. For buy-sell agreements, if it's a cross-purchase, each owner buys policies on all other owners. If it's an entity-purchase, the business buys a policy on each owner. The goal is to ensure adequate coverage for all critical individuals.
A partnership with three owners: For key-person, the company buys a $1M policy on each owner. For a cross-purchase buy-sell, Owner A buys policies on B and C, Owner B buys on A and C, and Owner C buys on A and B.
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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