Life insurance

If you’re pursing an SBA loan especially for a business acquisition or start up where the business relies on one or two key individuals or there’s a collateral short fall, its important to know Life insurance may be required. “Life insurance is required when the loan is not fully secured and the Lender determines that the viability of the business is tied to an individual or individuals.” – SBA SOP###-###-#### , Subpart B, Chapter 5, Section E Here’s what that means in practical terms: - If you are the sole owner or a key operator of the business - If you're acquiring a business and will run day-to-day operations - If there is insufficient business collateral to fully secure the loan - Then SBA will likely require a life insurance policy with the lender assigned as the collateral beneficiary. This isn’t just a checklist item. it’s a risk mitigation tool. The purpose is to protect the repayment of the loan and the continuity of the business in the event of the borrower’s unexpected passing. Do not change your current life insurance policy you have your for family and assign it to the lender. Get a separate policy! Don’t wait until underwriting to address this. If a policy is needed, understand from your lender the amount of life insurance needed and begin working with an experience life insurance agent to avoid delays If you’re considering SBA financing and unsure whether this applies to your deal, feel free to reach out. I’m happy to help you understand the requirements and avoid surprises.