What is a concentration reserve or single-debtor cap in an ABL facility?
A concentration reserve or single-debtor cap limits how much AR from any one customer may count toward the borrowing base. Excess over the negotiated cap is typically ineligible or taken as a concentration reserve. OCC lists a 10 percent concentration flag and a typical 10-to-20 percent receivables borrowing-base limit; Don Clarke lists excess-over-cap as reserve or ineligible.
Last updated: September 12, 2026
Definition: single-debtor cap and concentration reserve
Capital Source Group lists the plain definition: "A concentration limit is a cap on how much of a borrowing base may come from a single account debtor, and it renders otherwise collectible receivables ineligible once one customer exceeds the cap." LegalClarity on debtor limits says: "A debtor concentration limit caps how much of your outstanding receivables from one customer the factor will count as eligible collateral." On the borrowing-base certificate, Don Clarke states that "Concentration is calculated against eligible AR (after aging deductions), not gross AR."
OCC handbook: 10 percent flag, 10–20 percent limit, single-party risk
The OCC Comptroller's Handbook: Asset-Based Lending restores the exact PDF wording: "A bank normally considers receivables to be concentrated if there are single accounts representing 10 percent or more of the total receivables portfolio." The same handbook says: "A bank extending credit to a borrower with a concentrated customer base should limit concentrated accounts to no more than 10 percent to 20 percent of the receivables borrowing base." It also says: "A receivables concentration of one account or a few large accounts is often referred to as “single-party” risk" and lists "Receivables that exceed concentration limits." among ineligible receivables.
Excess over the cap: ineligible deduction or concentration reserve
Don Clarke on the BBC says: "Concentration in excess of cap. The dollar amount by which any single customer exceeds the concentration limit (commonly 10, 15, or 20 percent of total eligible AR)." and "Concentration reserve. Where the concentration carve-out is taken as a reserve rather than an ineligible deduction" Don Clarke on reserves states that "lenders consider a single customer concentrated at 10% or more of total receivables and typically cap concentrations at 10-20% of the borrowing base." and "Above the cap, the excess is either fully ineligible or carries a concentration reserve." LenderAnalyzer says: "A concentration limit caps how much of the eligible collateral any single account debtor may represent, most commonly at 20 percent" and that "the cap applies to the excess, not the customer." ABF Journal says: "Concentration limits are an ineligible category implemented to limit the business risk arising from substantial exposure caused by sales to a single large customer." and "Concentration ineligibles are calculated as excess amounts over an allowed limit amount."
OCC lists the handbook range of 10 percent to 20 percent of the receivables borrowing base. LegalClarity on ABL AR collateral says: "Lenders typically cap any single customer at 10% to 20% of the total receivables borrowing base." LegalClarity also lists the OCC-aligned regulator wording: "Federal banking regulators consider receivables concentrated when a single account represents 10 percent or more of the total portfolio, and most factors cap individual debtor exposure at 10 to 20 percent of the borrowing base." LenderAnalyzer separately lists most commonly at 20 percent. Don Clarke separately lists commonly 10, 15, or 20 percent of total eligible AR on the BBC excess-of-cap line.
| Claim | Listed | URL |
|---|---|---|
| OCC concentration definition | A bank normally considers receivables to be concentrated if there are single accounts representing 10 percent or more of the total receivables portfolio. | OCC ABL handbook PDF |
| OCC typical limit 10–20% of receivables borrowing base | A bank extending credit to a borrower with a concentrated customer base should limit concentrated accounts to no more than 10 percent to 20 percent of the receivables borrowing base. | OCC ABL handbook PDF |
| OCC single-party risk | A receivables concentration of one account or a few large accounts is often referred to as “single-party” risk | OCC ABL handbook PDF |
| OCC ineligible: exceed concentration limits | Receivables that exceed concentration limits. | OCC ABL handbook PDF |
| Don Clarke BBC: concentration in excess of cap | Concentration in excess of cap. The dollar amount by which any single customer exceeds the concentration limit (commonly 10, 15, or 20 percent of total eligible AR). | Don Clarke BBC line-by-line |
| Don Clarke BBC: concentration reserve vs ineligible | Concentration reserve. Where the concentration carve-out is taken as a reserve rather than an ineligible deduction | Don Clarke BBC line-by-line |
| Don Clarke BBC: concentration vs eligible AR | Concentration is calculated against eligible AR (after aging deductions), not gross AR. | Don Clarke BBC line-by-line |
| Don Clarke reserves: 10% / 10–20% + excess treatment | lenders consider a single customer concentrated at 10% or more of total receivables and typically cap concentrations at 10-20% of the borrowing base. Above the cap, the excess is either fully ineligible or carries a concentration reserve. | Don Clarke reserves negotiation |
| Capital Source: single account debtor concentration limit | A concentration limit is a cap on how much of a borrowing base may come from a single account debtor, and it renders otherwise collectible receivables ineligible once one customer exceeds the cap. | Capital Source Group |
| LegalClarity: debtor concentration limit definition | A debtor concentration limit caps how much of your outstanding receivables from one customer the factor will count as eligible collateral. | LegalClarity debtor limits |
| LegalClarity: 10% flag + 10–20% debtor cap | Federal banking regulators consider receivables concentrated when a single account represents 10 percent or more of the total portfolio, and most factors cap individual debtor exposure at 10 to 20 percent of the borrowing base. | LegalClarity debtor limits |
| LegalClarity ABL AR: single-customer 10–20% cap | Lenders typically cap any single customer at 10% to 20% of the total receivables borrowing base. | LegalClarity ABL AR collateral |
| LenderAnalyzer: most commonly 20%; excess not whole customer | A concentration limit caps how much of the eligible collateral any single account debtor may represent, most commonly at 20 percent; the cap applies to the excess, not the customer. | LenderAnalyzer borrowing base |
| ABF Journal: concentration limits as ineligible category | Concentration limits are an ineligible category implemented to limit the business risk arising from substantial exposure caused by sales to a single large customer. | ABF Journal AR ineligibles |
| ABF Journal: concentration ineligibles = excess over limit | Concentration ineligibles are calculated as excess amounts over an allowed limit amount. | ABF Journal AR ineligibles |
Frequently asked questions
What is a concentration reserve or single-debtor cap in an ABL facility?
A concentration reserve or single-debtor cap limits how much AR from any one customer may count toward the borrowing base. Excess over the negotiated cap is typically ineligible or taken as a concentration reserve. OCC lists a 10 percent concentration flag and a typical 10-to-20 percent receivables borrowing-base limit; Don Clarke lists excess-over-cap as reserve or ineligible.
What happens to AR above the concentration cap?
Don Clarke lists concentration in excess of cap as the amount by which any single customer exceeds the concentration limit, and concentration reserve as the carve-out taken as a reserve rather than an ineligible deduction. Above the cap, the excess is either fully ineligible or carries a concentration reserve. LenderAnalyzer states that the cap applies to the excess, not the customer.
What concentration percentages does the OCC handbook list?
The OCC Comptroller's Handbook on Asset-Based Lending states that a bank normally considers receivables concentrated if single accounts represent 10 percent or more of the total receivables portfolio, and that concentrated accounts should be limited to no more than 10 percent to 20 percent of the receivables borrowing base. Receivables that exceed concentration limits are listed as ineligible.
Are other market ranges the same as the OCC 10-to-20 percent limit?
No. OCC lists 10 percent to 20 percent of the receivables borrowing base. LenderAnalyzer lists concentration limits most commonly at 20 percent. Don Clarke lists excess-of-cap commonly at 10, 15, or 20 percent of total eligible AR.
What is single-party risk for concentrated ABL receivables?
The OCC handbook states that a receivables concentration of one account or a few large accounts is often referred to as single-party risk. Concentration limits and excess-over-cap ineligibles or reserves are the borrowing-base tools used to manage that exposure on the BBC.
Related
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- What is a borrowing-base certificate and when must it be submitted?
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