For SBA lenders
Short answer
Lenders must perform enhanced due diligence to assess the risk of losing a major customer, including evaluating contracts, customer relationships, and the buyer's plan to diversify the customer base.
Significant customer concentration (e.g., one customer accounting for >20-30% of revenue) poses a substantial risk to the business's stability and cash flow. Lenders should review contracts for duration and renewal terms, analyze the historical relationship, assess the likelihood of retention, and evaluate the buyer's strategy to mitigate this risk.
A business acquisition involves a company where 40% of revenue comes from a single customer. The lender requests copies of the customer contract, interviews the seller about the relationship, and requires the buyer to provide a detailed plan for either securing a long-term agreement or diversifying the customer base within a reasonable timeframe.
Insider move
The primary concern is the potential for a sudden, material drop in revenue if the concentrated customer is lost, jeopardizing repayment. The lender must ensure the business can withstand such an event or has a credible plan to reduce dependence, maintaining prudent lending standards.
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.
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