For SBA lenders
Short answer
A lender must assess the stability of the relationship with the concentrated customer, the likelihood of customer retention post-acquisition, and the borrower's plans to diversify the customer base.
High customer concentration represents a significant risk, as the loss of a single major customer can severely impact the business's cash flow and ability to repay the loan. Lenders must evaluate the nature of the relationship, historical customer loyalty, contractual agreements, and the buyer's strategy to mitigate this risk, ensuring prudent lending standards are met.
A borrower wants to acquire a manufacturing business where one customer accounts for 60% of its revenue. The lender scrutinizes the contract terms with that customer, the length of the relationship, the customer's financial stability, and the borrower's business plan detailing efforts to onboard new clients and reduce reliance on this single customer.
Insider move
Lenders worry about the ongoing viability of a business too reliant on one customer. Losing that customer could lead to default, diminishing collateral value, and a potential guaranty repair or denial for inadequate underwriting. Mitigation strategies must be credible.
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 prudent lending standards
Terms in this answer
Pre-qualify your SBA 7(a) deal
Tell us the business, the price, and where you are — we'll point you to the lenders most likely to fund a deal like yours and flag anything that trips up approval.
Free · No documents · Usually same-day