Glossary · Reading the business
Financial dependence
In short
This refers to a business relying heavily on one or a few customers or suppliers. As a buyer, high financial dependence is a risk because losing a key relationship could severely impact revenue or operations.
What it means in a deal
Lenders scrutinize financial dependence during underwriting as it affects the business's stability and repayment capacity. If you're acquiring a business with significant customer concentration, be prepared to demonstrate a robust plan to diversify revenue or mitigate this risk.
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 Financial dependence
- How does a lender determine affiliation for size purposes when evaluating common economic dependence?
- What if my personal financial statement shows low liquid assets?
- Are SBA 7(a) loans exclusively for businesses with financial difficulties?
- What if my business is new and has no financial history?
- Does misrepresenting financial information on the SBA application automatically kill approval?
- How does my personal financial history affect SBA 7(a) loan approval?
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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