Glossary · Reading the business
Concentrated risk
In short
A business has concentrated risk if too much revenue comes from a few customers, suppliers, or products. This makes the business vulnerable if those relationships change.
What it means in a deal
Lenders look for customer concentration, typically over 10-20% from a single client. If a large portion of the business depends on one or two clients, your due diligence needs to confirm those relationships are stable and diversified. Mitigate this by securing long-term contracts or diversifying the customer base post-acquisition.
Related terms
Common questions about Concentrated risk
- What if a significant portion of the business's historical revenue came from a single, concentrated customer that will not transfer to the new owner?
- If a business acquisition includes real estate with known environmental risks, can it still be financed?
- What personal risks do I take with a personal guaranty on an SBA 7(a) loan?
- What are the risks for a lender holding the unguaranteed portion of an SBA 7(a) loan?
- What specific underwriting failures or omissions by a lender are categorized as 'material non-compliance' by the SBA, risking 7(a) guaranty repair or denial?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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