For SBA lenders
Short answer
If a significant portion of historical revenue came from a concentrated customer that will not transfer, the lender must critically assess the business's projected cash flow, potentially adjusting projections downward, and ensure the buyer has a credible plan to replace that revenue.
Prudent lending requires analyzing the sustainability of revenue streams. A substantial loss of a key customer post-acquisition materially impacts future cash flow and the business's ability to repay the loan. The lender must ensure the business can service the debt based on realistic, post-acquisition projections.
A business being acquired for $1,000,000 historically generated 40% of its revenue from one large corporate client, which has stated it will not work with the new owner. The lender must significantly discount historical revenue in their projections, require the buyer to provide a detailed plan for new customer acquisition, and ensure the revised projections still support debt service.
Insider move
Lenders must identify customer concentration risks during due diligence. Overlooking or inadequately addressing the loss of a major customer can lead to unrealistic projections, poor loan performance, and ultimately a default, reflecting a lack of prudent underwriting.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-13. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-13 · SBA sources checked through 2026-06-13. DealRoom analysis of public SBA 7(a) lending records (FY2020–present). Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
More on change-of-ownership underwriting
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