SBA Loan Insurance Requirements

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What Insurance Is Needed for SBA Loans?

sba loan insurance requirementsBefore your company can get a small business loan from the Small Business Administration (SBA), you’ll need the right insurance coverages. In fact, the SBA requires certain coverages before they give you loans. However, these insurance requirements vary depending on your type of business and the loan you choose. Some common policies that the SBA may require include:  
  • Hazard insurance
  • Property insurance
  • General liability insurance
  • Professional liability insurance
  • Workers’ compensation insurance
  • Liquor liability insurance

Seguro Contra Riesgos

Small business hazard insurance helps protect your business’ owned or rented building. It can also help repair or replace:
  • Personal property
  • Tools and equipment
  • Inventario
  • Muebles
  • Computers
  • Valuable documents
So, if a fire damages your business’ building, hazard insurance can help cover your repair costs. One example where small business owners may need hazard insurance is with Economic Injury Disaster Loans (EIDL) from the SBA. These loans are available to small business owners of non-profits and those in agriculture across the U.S. The maximum loan amount for EIDL loans is $500,000.1

Seguro de propiedad

Commercial property insurance helps protect your business and its physical assets. This insurance coverage is especially important for home-based businesses. It helps pay for the repairs or replacement of damaged property from fire, theft or other covered losses. This can include your:
  • Building
  • Equipos
  • Tools
  • Inventario
  • Muebles
  • Personal property
EIDL loans from the SBA that are greater than $25,000 usually require some collateral, like machinery, equipment or furniture.2 The SBA will likely require you to have personal property insurance to cover that collateral.

Seguro general contra terceros

General liability insurance will help cover your business from property damage and bodily injury claims. So, if a customer slips and falls in your store, this coverage can help pay for their medical treatment.
Similar to personal property, many SBA loans that require collateral will likely require insurance coverage to help protect that property from damage. For instance, general liability insurance may be required to help cover your property and pay to replace it if it’s damaged. Flood insurance may also be required if your business is in an area that’s prone to flooding.

Seguro de responsabilidad profesional

Professional liability insurance can help protect your business from errors or omissions that you or your employees make on the job. It can help cover claims of:
  • Negligence
  • Misrepresentation
  • Inaccurate advice
This means if your accountant provides inaccurate financial advice to a client and they sue your business, this coverage can help pay your legal costs. If your business gives out professional advice or services to your clients, the SBA will likely require you to have professional liability insurance.

Seguro de compensación para trabajadores

If your business has employees, you’ll likely need workers’ compensation insurance. This coverage can help provide benefits to your employees if they have a work-related injury or illness. These benefits include:
  • Help paying for medical treatment
  • Replacing lost wages if your employee needs time off work to recover
  • Disability benefits
  • Paying for funeral expenses
If your business has employees, the SBA will likely require you to carry coverage that meets your state’s minimum requirements.

Liquor Liability Insurance

Liquor liability insurance is important if your small business sells, serves or distributes alcohol. This coverage can help pay for claims of bodily injury or property damage caused by an intoxicated person after they have alcohol from your business. SBA loans typically require this coverage.

Additional SBA Loan Insurance Requirements

sba loan insuranceIn addition to the coverages above, your business may need additional policies in order to get a loan. This can depend on the loan amount and the type of business you run. Some other coverages you may need include:
  • Term life insurance
  • Product liability insurance
  • Flood insurance
  • Real estate insurance

Are You Personally Liable for an SBA Loan?

Business owners are personally liable for SBA loans. This means that you’re responsible to repay the loan. If you don’t, your lender can sue you to collect what you owe them. This can result in you losing your business or personal assets.
Game Plan
  • Ready to get a small business loan that can help you take your company to the next level? To get started, follow these steps:
  • Research which loans you need from the SBA.
  • Make sure you get the right seguro para pequeñas empresas for that loan.
  • Check with your bank or credit union to see if they offer SBA loans. If they don’t, you’ll want to find a lender that does. You can also use SBA’s online lender match tool.
  • Submit your application to your lender.
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