Glossary · The loan itself
Loss payee
In short
The party designated to receive payment from an insurance policy in case of loss or damage. Your lender will be listed as a loss payee on your business insurance policies.
What it means in a deal
For an SBA 7(a) loan, the lender is typically named as a loss payee on property and casualty insurance policies covering the business assets that serve as collateral. This ensures the lender's interest is protected if the collateral is damaged or destroyed.
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 Loss payee
- What are the specific requirements for naming the lender as the loss payee on a life insurance policy collateral assignment?
- What steps must a lender take to mitigate loss during loan liquidation before submitting a Universal Purchase Package (UPP)?
- What specific steps must a lender take to mitigate loss during loan liquidation before submitting a Universal Purchase Package (UPP)?
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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