If you want to start a new business or improve an existing company, a Small Business Administration loan could help. These loans can empower you to acquire tools, heavy equipment, commercial buildings, and other items. They usually come from banks or credit unions. The SBA guarantees the loan, making it easier for an applicant to qualify. However, some Albany, NY entrepreneurs may be required to obtain life insurance policies before they’re eligible to borrow.

Is Insurance Required?

Small Business Administration loans often have this requirement, but some exceptions exist. You might not need it if you have a clear plan to transfer ownership to a qualified person who is genuinely prepared to run the business (when you pass away). Likewise, you don’t need it if you have sufficient collateral. Even if you own valuable collateral, consider protecting your assets by using a life insurance policy instead.

Why Is It Required?

Unlike most prominent companies, the success of a small business is often closely tied to one individual’s skills, expertise, and personality. This is why the SBA and lenders may use life insurance to protect their investments. The policy effectively serves as collateral. Many lenders will allow you to use either permanent or term life insurance, but it must remain in effect until you have repaid the loan (or later). The lender might expect you to apply for new insurance rather than using an existing policy.

If you need life insurance to qualify for an SBA loan, NY Twin Bridges Insurance Agency can help. Our Albany, NY, office is staffed with skillful independent agents who know how to compare policies from major carriers and find an option that meets your exact needs. Please call 518-608-5797 or 855-608-5797 to contact NY Twin Bridges Insurance Agency for a free quote.