Glossary · Reading the business
Customer Concentration Risk
In short
This is the risk that a large portion of a business's revenue comes from a single customer or a small group of customers. Losing one major customer could severely impact the business's cash flow.
What it means in a deal
Lenders will flag this during underwriting, especially if one customer accounts for over 15-20% of revenue. You need to understand why this concentration exists and have a clear plan to diversify the customer base or demonstrate the stability of key relationships. High concentration can make a deal harder to finance.
Official sources
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Customer Concentration Risk
- Can a high customer concentration (e.g., one customer is 50% of revenue) jeopardize my SBA 7(a) loan approval?
- How does high customer concentration in a target business affect SBA 7(a) acquisition loan approval?
- What specific factors should a lender assess when underwriting a business with a high customer concentration?
- Can an SBA 7(a) loan be used to purchase a business with a high customer concentration?
- What specific due diligence is required from a lender if the business being acquired has significant customer concentration?
- What if the business I'm acquiring has a high customer concentration, with one client representing 50% of revenue?
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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