The Small Business Association has always played an essential role in helping new and existing small businesses obtain working capital due to its special relationship with major lenders. The SBA loan program can help you secure the funding you need to purchase new equipment, increase your inventory, expand your market reach, and so much more. The process of obtaining an SBA loan involves a unique relationship between the SBA itself and a bank or lender. In order to secure approval for an SBA loan, you will be required to offer an asset up for collateral to the bank. This collateral is often a life insurance policy. While life insurance policies can take weeks to acquire, advances in medical underwriting allow for companies like ours, My Life Insurance Specialists, to help people apply, and if approved, obtain a Term Life Policy in minutes!
Term Life for SBA Loans Simply Make Sense
For those of you who may not know, a Term Life Insurance policy is one of the most affordable types of life insurance. For example, a healthy 35-year-old female that is approved can obtain $500,000 dollars’ worth of coverage over a 20-year term for as little as $25 dollars per month!
When securing an SBA loan, using a term life policy as collateral is the path of least resistance financially.
The Term and the Coverage Amount Should Match the Loan Request
This is fairly straightforward. Let’s say you are applying for an SBA loan of $200,000 dollars payable over 10 years. In order to qualify you will need to take a 10-year term policy with a death benefit of $200,000. For the same healthy 35-year-old in the example above, this would equate to a monthly premium payment of around $10 dollars.
It’s important that you not miss any premium payments
In order for the term life policy to stay “in-force”, make sure that you pay your monthly premiums. If you are using automated monthly payment, be certain that the account that is drawn from has enough to cover the monthly premium for failing to do so could result in a violation of your agreement with the lender.
Why the Bank Needs You to Have a Term Life Policy
SBA loans are different from traditional bank loans. The power of the SBA allows both the SBA and the bank to share the risk should someone default on the loan. In one sense, the SBA is backing you and your business in the process. Should something happen to you during the course of paying back the loan, the bank needs to be guaranteed to get their money back. This is where the Term Life policy comes in. It protects the loan from the bank should you pass away during the term of the loan. A collateral assignment will be required that assigns the benefit of the life insurance policy to the bank in the amount that is still owed. The remainder of the benefit will go to the named beneficiary. The amount owed on the note will decrease over time, allowing the named beneficiary’s benefit to increase.
Fast, No-Exam Term Life Insurance Is the Answer
Now that the technology exists to obtain a term life policy in less than 15 minutes once you are approved, there is no reason not to take advantage of the convenience. There are no medical exams required which means no lab work, urine samples, no needles. It is as simple as selecting your term, your coverage amount, and accurately filling out an application. Once approved, you will be good to go and get your SBA loan.
So, What Are You Waiting For?
My Life Insurance Specialists utilizes online term life products from Bestow, a leader in the online term life industry. If you want to see which term policies you qualify for and how much they cost, simply click here. It only takes a few minutes and you will be on your way to securing the capital you need to grow your business!