Glossary · The loan itself
Whole life insurance
In short
Whole life insurance provides lifelong coverage and includes a savings component that accumulates cash value over time. It's more expensive than term life insurance and generally not preferred by SBA lenders for loan collateral.
What it means in a deal
While whole life insurance builds cash value, SBA lenders typically prefer term life insurance for loan collateral because it's simpler and directly covers the loan amount for the relevant period. If you have a whole life policy, the lender might accept an assignment if its cash value is sufficient and accessible.
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 Whole life insurance
- When is term life insurance more suitable than permanent life insurance for business protection?
- How does disability insurance complement life insurance for business protection?
- How does business overhead expense insurance differ from key-person life insurance?
- Is a decreasing term life insurance policy acceptable for the SBA's life insurance requirement on a 7(a) loan?
- Why is long-term disability insurance considered a vital complement to business life insurance?
- How are appropriate business life insurance coverage amounts calculated?
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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