Glossary · People and paperwork
Primary Beneficiary
In short
This is the person or entity designated to receive the proceeds from a life insurance policy. For SBA loans, the lender is often named the primary beneficiary.
What it means in a deal
If the SBA requires life insurance on a key principal, the lender will typically be named the primary beneficiary up to the outstanding loan balance. This ensures the loan can be repaid if something happens to the key person. You will sign an Assignment of Policy Form, giving the lender this right, which protects them, not your family or business.
Official sources
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 Primary Beneficiary
- What is the difference between collateral assignment and naming a lender beneficiary?
- Who owns and is the beneficiary of a key-person life insurance policy?
- Who must be named as the beneficiary for life insurance on a 7(a) loan?
- When is life insurance on key principals required by the SBA, and who must be the beneficiary?
- Can the borrower's business entity be named as the beneficiary for SBA-mandated life insurance, instead of the lender?
- How should a lender structure the beneficiary and assignment of life insurance on a key principal for 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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