SBA Loan Insurance Compliance Under SOP 5010 8: The Top 15 Requirements for Underwriters and Closers — 11/21
A Coleman Training Webinar
Date: Friday, November 21, 2025
Time: 2:00 p.m. Eastern
Includes e-certification & recording
SBA SOP 5010 8 introduced significant changes to insurance requirements for both 7(a) and 504 loans, placing heightened emphasis on lender compliance. A single oversight—such as a missing hazard, flood, or life insurance policy, or incomplete documentation in the credit memo or loan file—can lead to an SBA repair or even a complete denial of the guaranty.
To safeguard the guaranty, underwriters must ensure that all required insurance provisions are accurately reflected in both the credit memorandum and the SBA E-Tran Terms and Conditions. Closers, in turn, must confirm that every policy is properly obtained, endorsed, and verified prior to disbursement.
Compounding this challenge, the insurance industry is increasingly limiting coverage for natural disasters—including hurricanes, fires, and earthquakes—making it imperative for SBA lenders to know when to force-place coverage, when a waiver is appropriate, and precisely how to document these decisions to SBA’s satisfaction.
Join Coleman’s nationally recognized SBA expert and award-winning instructor Lance Sexton as he delivers key insights from the new SOP and recent SBA senior management guidance. Lance will provide lenders with actionable guidance on how to proactively and reactively comply with SBA’s insurance requirements to protect the guaranty.
Key topics include:
- The specific insurance coverage underwriters are required to address for each collateral type.
- The exact credit memo language that must be included to meet SBA documentation standards.
- Best practices for closers to verify insurance policies and endorsements prior to loan funding.
The Fifteen Critical Insurance Coverages Every SBA Lender Must Address
The revised SBA SOP explicitly identifies fifteen categories of insurance that lenders must evaluate and document based on the loan’s collateral, size, and the borrower’s business operations. Properly addressing each of these requirements is essential to maintain guaranty compliance and mitigate institutional risk.
These coverages include:
- Hazard Insurance – Core protection for assets pledged as collateral.
- Wind Insurance – Required in hurricane-prone or coastal regions.
- Hail Insurance – Necessary in states with significant hail exposure.
- Earthquake Insurance – Mandated in seismically active areas.
- State-Mandated Insurance – Any coverage specifically required under applicable state law.
- Marine Insurance – For vessels pledged as collateral, including required endorsements.
- Flood Insurance – Determined by FEMA flood maps or NFIP guidelines.
- Life Insurance (Key Person) – Required when loan repayment is dependent on a principal’s active participation and collateral is insufficient.
- Liability Insurance – General liability protection for the business.
- Product Liability Insurance – For manufacturers, distributors, or sellers of goods.
- Dram Shop/Host Liquor Liability Insurance – For businesses that sell or serve alcoholic beverages.
- Malpractice Insurance – For professional service providers in regulated industries.
- Disability Insurance – Provides income protection for a key individual critical to repayment.
- Worker’s Compensation Insurance – Required under state employment laws.
- Any Other Insurance Required by SBA or State Law – As dictated by the specific loan structure, collateral type, or industry.
A comprehensive understanding of these fifteen categories—and their documentation requirements—is fundamental to ensuring that both underwriting and closing practices align with SBA standards, thereby protecting the guaranty.
You and Your Staff Will:
- Learn about SBA loan dollar amount collateral insurance thresholds – loans greater than $350,000, and loans less than $50,000.
- Understand collateral insurance requirements at loan closing and during servicing – and how underwriters and closers share responsibility for compliance.
- Gain knowledge about the SBA loan servicing matrix and how it applies to ongoing insurance monitoring.
- Learn how and when to force-place insurance and when it is permissible to waive insurance requirements under the new SOP.
- Get insights into perfecting insurance documentation for SBA loans – what language must appear in the credit memo and the loan file.
- Understand the clauses and requirements demanded by SBA for hazard insurance, including proper Mortgagee and Lender’s Loss Payable Clauses.
- Learn how to handle situations where insurance is not fully available – and how to document exceptions for SOP compliance.
- Discover insurance requirements for real estate and personal property, including full replacement cost vs. maximum insurable value.
- Understand the lender’s loss payable clause and its implications for collateral protection.
- Gain knowledge about SBA and flood insurance requirements, including what qualifies as acceptable private flood insurance.
- Learn when “key man” life insurance may be required, and how to calculate the amount when a loan is not fully secured.
- Have a plan of action for dealing with lapses in insurance coverage, including required servicing actions.
- Understand SBA’s insurance escrow payment account policies and when they are required.
- Develop credit policies for insurance requirements on SBA loans, tailored for different loan sizes and types.
- Familiarize yourself with the fifteen references to insurance in the SBA SOP, covering hazard, wind, hail, earthquake, flood, liability, life insurance, and more.
- Learn what your credit policy should be for insurance requirements on SBA loans less than $500,000.
- Learn what your credit policy should be for insurance requirements on SBA Express loans, including when waivers are permitted and how to document the decision.
Why This Webinar Matters
This training ensures that your underwriters and closers know exactly what to include in credit memos and closing files to stay compliant with SBA’s new SOP insurance requirements.
Improper insurance documentation can lead to SBA guaranty repair or denial.
- Date: Friday, November 21, 2025
- Instructor: Lance Sexton, SBA Servicing & Liquidation Expert
- Format: Live Coleman Report Webinar + Recording
Protect your guaranty. Train your team. Get compliant.
Register today to secure your spot!
Your Training Instructor
Lance Sexton
Lance Sexton brings unmatched expertise to SBA servicing and liquidation training. A former small business owner himself, Lance understands firsthand the challenges lenders and entrepreneurs face. He has more than 40 years of experience in SBA lending, including 20 years directly managing portfolios of SBA loans.
Lance served as Deputy Director of the SBA’s Little Rock Servicing Center, giving him unique insight into how the Agency views compliance, servicing, and guaranty purchase. He has personally overseen SBA loan portfolios worth billions, and today he serves as Executive Vice President and Managing Director of Servicing and Liquidation at Phoenix Lender Services.
Lance is also an award-winning educator, having earned three national industry awards for “Best Online Learning Product.” He is an adjunct faculty member at the University of the Ozarks and has been affiliated with Coleman Publishing for over 11 years, where he has trained thousands of SBA professionals nationwide.
By the Numbers
– Personally involved in more than 500 SBA 7(a) guaranty purchase cases totaling over $500 million
– Serviced portfolios for more than $2 billion in SBA 7(a) loans
– Managed servicing, liquidation, and guaranty purchase for over $4 billion in PPP loans
– 40+ years of SBA lending and servicing expertise
How the Webinar Works
We use Microsoft Teams as the webinar platform. All Coleman webinars are recorded and a link is sent to all attendees.
Single Site License
The single site license grants your institution one viewing of the webinar. It is permissible to use a single site license on one device in a conference room to be viewed by multiple attendees The webinar can be viewed on any device.
Multiple Site License
A multiple site license is an unlimited access pass for anyone at your institution. You will be given a link that will be usable to anyone with your email domain.
Webinar Links and Handouts
The webinar link will be included when we distribute the presentation and handouts shortly before the webinar.
Participants Earn Certificates of Participation
All Coleman Webinar attendees will receive a certificate of participation. This documents your continuing education history for SBA and your regulators.
Questions
Questions throughout the webinar are strongly encouraged. There are two ways to ask a question. The first is to ask the question via the chat in Microsoft Teams. The second is to send an email to anna@colemanreport.com. Also, feel free to ask pre and post-webinar questions.
The Fine Print
1) Substitutions are allowed at no charge.
2) Cancellations receive a 100% credit for any Coleman product.
3) As with all our products, we offer a 100% money back satisfaction guarantee — no questions asked.
3 Easy Ways to Order
1) ONLINE — Register and pay online via QuickBooks above
2) EMAIL –Send an email to cindy@colemanreport.com with “Webinar Registration” in the Subject Line. We will do all the paperwork and either send you a sales receipt or an invoice.
3) PHONE — Call us at 818-790-4591.
Bob Coleman
Publisher, Coleman Report
bob@colemanreport.com