{"ok":true,"canonical_url":"https://dealroom.so/glossary/supplier-concentration","api_url":"https://dealroom.so/api/public/glossary/supplier-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":"supplier-concentration","term":"Supplier concentration","group":"Reading the business","definition":"When a business relies heavily on one or a few suppliers for critical goods or services. This is a risk because losing a key supplier can cripple operations and impact your ability to serve customers.","what_it_means":"Evaluate supplier relationships during due diligence. If one supplier accounts for over 20-30% of your costs, that's a red flag. Investigate the health of that supplier, the terms of their agreement, and the ease of finding alternatives. High concentration might require renegotiating terms or diversifying before closing.","url":"https://dealroom.so/glossary/supplier-concentration","official_sources":[],"related":[{"slug":"supply-chain","term":"Supply chain","url":"https://dealroom.so/glossary/supply-chain"},{"slug":"supplier-agreement","term":"Supplier agreement","url":"https://dealroom.so/glossary/supplier-agreement"},{"slug":"procurement-process","term":"Procurement process","url":"https://dealroom.so/glossary/procurement-process"},{"slug":"due-diligence","term":"Due diligence","url":"https://dealroom.so/glossary/due-diligence"}],"related_questions":[{"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"},{"question":"What if the business I am buying has a high customer concentration, with one client representing 50% of revenue?","url":"https://dealroom.so/sba-7a/questions/what-if-the-business-i-am-buying-has-a-high-customer-concentration-with-one-client-represe"}]},"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 — Supplier concentration","url":"https://dealroom.so/glossary/supplier-concentration","source_type":"DealRoom Data"}}