Glossary · People and paperwork
Assignment of Claims Act
In short
A federal law that allows businesses to assign payments from government contracts to a lender. This is crucial if a significant portion of the business's revenue comes from government contracts.
What it means in a deal
If the business you're buying has contracts with the federal government, your lender will likely require an assignment of claims. This ensures the government pays the lender directly, or acknowledges the lender's right to future payments, reducing risk for the lender. It's a key part of securing collateral for government contractor loans.
Official sources
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.
Related terms
Common questions about Assignment of Claims Act
- Can my personal savings account act as collateral for an SBA 7(a) loan?
- How does a collateral assignment of life insurance protect a lender?
- What if the business I want to buy has pending litigation or unresolved legal claims?
- When does the SBA typically mandate collateral assignment of life insurance for a business loan?
- How does a lender ensure proper collateral assignment of life insurance on multiple key principals?
- When is collateral assignment of life insurance required for principals on an SBA 7(a) loan?
Defined by CapBench 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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