Glossary · Your money in the deal
Death benefit
In short
The payout from a life insurance policy to your beneficiaries upon your death. For a buyer getting an SBA loan, this isn't directly relevant to funding, but the policy itself might be collateral.
What it means in a deal
While the death benefit isn't a source of funds for your equity injection, the life insurance policy itself is often assigned to the SBA lender as collateral for the loan, especially if you're a key principal. This protects the lender if you die before the loan is repaid. The focus for the buyer is usually the Cash surrender value as a source of funds.
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 Death benefit
- Who legally owns a key-person life insurance policy and who receives the death benefit?
- Are death benefits from a business life insurance policy generally taxable to the recipient?
- How does the SBA guarantee truly benefit me as the borrower?
- How does the SBA guarantee primarily benefit me as the business owner?
- What is the main benefit of an SBA 7(a) loan over a traditional bank loan?
- What is the main benefit of an SBA 7(a) loan compared to a conventional bank 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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