SBA SOP 50 10 8, A.Ch5.C.3 — Flood Insurance
Verbatim text of SBA SOP 50 10 8 section A.Ch5.C.3 (Flood Insurance), effective 2025-06-01. 4 provision(s) quoted from the SOP PDF. SBA's own document page serves superseded editions, and the SOP is further amended by policy notices — read this with the notices that touch it.
Verbatim regulatory text
Verbatim provisions from SBA SOP 50 10 8, A.Ch5.C.3 — Flood Insurance — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
SOP 50 10 8 A.Ch5.C.3
3. Flood Insurance SBA flood insurance requirements are based on the Standard Flood Hazard Determination (FEMA Form 086-0-32 or its successor). The mandatory purchase of flood insurance will be required as set forth by the provisions of the National Flood Insurance Program (NFIP) and the Interagency Questions and Answers Regarding Flood Insurance at 12 CFR Part 22, 12 CFR Part 208, 12 CFR Part 339, 12 CFR Part 614 and 12 CFR Part 760. Policies for condominium and cooperative units will consist of a policy obtained by the individual unit owner for the particular unit. For 504, CDCs must obtain a FEMA Form 086-0-32 (or its successor), or a copy of the form obtained by the Interim or Third Party Lender. Private flood insurance will be accepted; however, it must meet the same requirements as the standard NFIP policy. If used, private flood insurance must:
SOP 50 10 8 A.Ch5.C.3.i
i. Provide coverage that is at least as broad as the coverage provided under the standard NFIP policy, including when considering deductibles, exclusions, and conditions offered by the insurer; ii. Include an endorsement that the insurer must give 45 days’ notice of cancellation for non-renewal to the insured and the 7(a) Lender (for 7(a)), or the CDC/SBA (for 504); iii. Include information about the availability of flood insurance coverage under the NFIP;
SOP 50 10 8 A.Ch5.C.3.i.iv
iv. Contain a mortgage interest clause similar to the one in the standard NFIP policy; v. Contain a provision requiring an insured to file suit not later than 1 year after date of a written denial of all or part of a claim under the policy; and
SOP 50 10 8 A.Ch5.C.3.i.vi
vi. Contain cancellation provisions that are as restrictive as the provisions contained in the standard NFIP policy. If any portion of a building that is collateral for the loan is located in a special flood hazard area, the SBA Lender must require the Applicant to obtain flood insurance for the building under the NFIP or comparable private flood insurance (see Subparagraph b above). If any equipment, fixtures or inventory that is collateral for the loan (“Personal Property Collateral”) is in a building of which any portion is located in a special flood hazard area and that building is collateral for the loan, SBA Lender must require Applicant to also obtain flood insurance for the Personal Property Collateral either under the NFIP or through comparable private flood insurance (see Subparagraph b above). Insurance coverage must be at least equal to the outstanding principal balance of the loan or the maximum limit of coverage made available under the National Flood Insurance Act of 1968, as amended (42 U.S.C. § 4001 et seq.), whichever is less. (“Maximum limit of coverage available” is the lesser of the maximum limit available under the NFIP for the type of structure or the insurable value of the structure.) Insurance coverage must contain a MORTGAGEE CLAUSE/LENDER’S LOSS PAYABLE CLAUSE (or substantial equivalent) in favor of the 7(a) Lender (for 7(a)), or the CDC/SBA (for 504). This clause must provide that any action or failure to act by the debtor or owner of the insured property will not invalidate the interest of the 7(a) Lender (for 7(a)), or the CDC/SBA (for 504). The policy or endorsements must provide for at least 10 days prior written notice of policy cancellation to the 7(a) Lender (for 7(a)), or the CDC/SBA (for 504), or 45 days in the case of private flood insurance.
Operationalizing SBA SOP 50 10 8, A.Ch5.C.3 — Flood Insurance
This is verbatim, source-snapshotted regulator text from the Claude for Compliance open corpus. To turn a rule like this into compliance work product: gap-analyze your policies and procedures (P&Ps) against these requirements to surface stale, conflicting, or missing provisions; operationalize any change with a ready-to-run update kit; and produce audit-ready evidence — every step grounded only in the regulator’s own words, never invented.
To work from the whole rulebook rather than this one page: download the corpus — every register on this site, verbatim, each with its source snapshot and effective date — then follow the methodology. It asks your assistant to answer only from the downloaded text, cite the register id and effective date it used, and tell you when the corpus does not cover something instead of filling the gap from memory. Running it locally also means no one sees which regulations you are looking at.
Source of record: https://claudeforcompliance.com/regs/sba-sop-a-ch5-c-3/
· register sba-sop-a-ch5-c-3 · Claude for Compliance. Free to read and download;
see regulatory updates and methodology.