Glossary · People and paperwork
Collateral assignment agreement
In short
A legal document that transfers ownership of a specific asset to a lender as collateral for a loan, without changing physical possession. Buyers care because it secures the loan, limiting your financial flexibility with that asset.
What it means in a deal
In an SBA loan, certain assets, like life insurance policies or specific business equipment, might be pledged as collateral via this agreement. For instance, a life insurance assignment agreement ensures the lender is paid if the key person dies. Understand which assets are tied up and what the implications are for your post-acquisition operations.
Official sources
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
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 Collateral assignment agreement
- How does a collateral assignment of life insurance protect a lender?
- What is the difference between collateral assignment and naming a lender beneficiary?
- When does the SBA typically mandate collateral assignment of life insurance for a business loan?
- What are the specific requirements for life insurance collateral assignment when multiple key principals exist?
- How does a lender ensure proper collateral assignment of life insurance on multiple key principals?
- When is life insurance collateral assignment required for key principals in an acquisition, and for whom?
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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