Glossary · People and paperwork
Key Principals
In short
Individuals who own 20% or more of the business, or those with significant management responsibilities. These are the people the SBA will scrutinize for loan eligibility and guarantees.
What it means in a deal
All key principals must provide personal financial statements, tax returns, and undergo credit checks. They will also be required to personally guarantee the SBA loan. Ensure all individuals meeting this definition are identified early, as their background, creditworthiness, and financial health are critical to loan approval and closing the deal.
Official sources
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
SBA Form 1919 — Borrower Information Form
U.S. Small Business Administration · SBA form
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Key Principals
- When is life insurance on key principals a mandatory loan condition?
- When is life insurance required on key principals for an SBA 7(a) 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 on key principals absolutely required for an SBA 7(a) loan?
- 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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