{"ok":true,"canonical_url":"https://dealroom.so/glossary/customer-concentration","api_url":"https://dealroom.so/api/public/glossary/customer-concentration","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"customer-concentration","term":"Customer concentration","group":"Reading the business","definition":"When a large percentage of a business's revenue relies on a small number of customers. For buyers, high customer concentration is a significant risk, as losing even one major customer can severely disrupt cash flow.","what_it_means":"Lenders pay close attention to customer concentration because it directly impacts the business's stability and your ability to make loan payments. During due diligence, demand a customer list with a detailed revenue breakdown. If concentration is high, thoroughly investigate the strength of those customer relationships, existing contract terms, and any plans for diversification.","url":"https://dealroom.so/glossary/customer-concentration","official_sources":[],"related":[{"slug":"cash-flow","term":"Cash flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"underwriting","term":"Underwriting","url":"https://dealroom.so/glossary/underwriting"},{"slug":"prudent-lending-standards","term":"Prudent lending standards","url":"https://dealroom.so/glossary/prudent-lending-standards"}],"related_questions":[{"question":"Can a high customer concentration (e.g., one customer is 50% of revenue) jeopardize my SBA 7(a) loan approval?","url":"https://dealroom.so/sba-7a/questions/can-a-high-customer-concentration-e-g-one-customer-is-50-of-revenue-jeopardize-my-sba-7-a-"},{"question":"How does high customer concentration in a target business affect SBA 7(a) acquisition loan approval?","url":"https://dealroom.so/sba-7a/questions/how-does-high-customer-concentration-in-a-target-business-affect-sba-7-a-acquisition-loan-"},{"question":"What specific factors should a lender assess when underwriting a business with a high customer concentration?","url":"https://dealroom.so/for-lenders/questions/what-specific-factors-should-a-lender-assess-when-underwriting-a-business-with-a-high-cust"},{"question":"Can an SBA 7(a) loan be used to purchase a business with a high customer concentration?","url":"https://dealroom.so/sba-loans/basics/can-an-sba-7-a-loan-be-used-to-purchase-a-business-with-a-high-customer-concentration"},{"question":"What specific due diligence is required from a lender if the business being acquired has significant customer concentration?","url":"https://dealroom.so/for-lenders/questions/what-specific-due-diligence-is-required-from-a-lender-if-the-business-being-acquired-has-s"},{"question":"What if the business I'm acquiring has a high customer concentration, with one client representing 50% of revenue?","url":"https://dealroom.so/sba-loans/basics/what-if-the-business-i-m-acquiring-has-a-high-customer-concentration-with-one-client-repre"}]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Customer concentration","url":"https://dealroom.so/glossary/customer-concentration","source_type":"DealRoom Data"}}