Concentration Limit Calculator
This free calculator shows how a debtor concentration limit affects a borrowing base. Enter the eligible receivables pool, the concentration limit percentage, and a single debtor's balance, and it returns the concentration cap, the debtor's share of the pool, the concentration excess that becomes ineligible, and the eligible pool after that excess is removed.
How concentration limits work
A concentration limit caps how much of a borrowing base any single account debtor can represent. The cap is the eligible pool times the limit percentage, and any amount a debtor holds above the cap is concentration excess, treated as an ineligible receivable and removed before the advance rate is applied.
Frequently asked questions
What is a concentration limit?
A concentration limit caps how much of a borrowing base any single account debtor can represent, usually 15 to 25 percent of the eligible pool, protecting the lender from over-exposure to one debtor.
How is concentration excess calculated?
Multiply the eligible pool by the limit percentage to get the cap. If a debtor's balance is above the cap, the amount above it is concentration excess, which is ineligible and removed from the borrowing base.
This is one of Zolvo's commercial lending calculators, and pairs with the borrowing base calculator. Estimate only. Zolvo monitors eligibility, concentration, and dilution across a book through portfolio monitoring.