Glossary · The loan itself
flood insurance
In short
Insurance required by the SBA for any collateral property located in a Special Flood Hazard Area (SFHA) to protect against damage from flooding.
What it means in a deal
If your business property or any collateral is in an SFHA, you must obtain flood insurance from the National Flood Insurance Program (NFIP) or an approved private insurer. This is a mandatory closing condition and an ongoing expense. Ensure the policy covers the full insurable value or the maximum available, whichever is less.
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 flood insurance
- What environmental due diligence is required for real estate collateral located in a flood hazard area for a 7(a) loan?
- How does disability insurance complement life insurance for business protection?
- How does business overhead expense insurance differ from key-person life insurance?
- Why is long-term disability insurance considered a vital complement to business life insurance?
- When is term life insurance more suitable than permanent life insurance for business protection?
- Is a decreasing term life insurance policy acceptable for the SBA's life insurance requirement on a 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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