Glossary · Reading the business
Revenue concentration
In short
This occurs when a large portion of a business's revenue comes from a small number of customers or a single product/service. It's a risk because losing one major client can severely impact cash flow.
What it means in a deal
During due diligence, identify any revenue concentration. If 20% or more of revenue comes from one customer, the lender will scrutinize this risk. Develop a plan to diversify revenue post-acquisition, and be prepared to explain how you'll mitigate this vulnerability to your lender.
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 Revenue concentration
- What if the business I'm acquiring has a high customer concentration, with one client representing 50% of revenue?
- What if the business I am buying has a high customer concentration, with one client representing 50% of revenue?
- 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?
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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