Funeral Home Financing up to $600,000
The funeral home industry is vastly misunderstood, but funeral home owners have a responsibility to families of the deceased to be caring, understanding, and offer the support they need in their time of need. As with any business, funeral home financing may be necessary to make it all happen. We can approve you for up to $600,000 within 24 hours.
Death is a complex topic. Funeral homes, the perfect memorials, and the process of burying a loved one with dignity can be scary. But they are a necessary investment for everyone. Therefore, it is easy to surmise that funeral homes have a lot of untapped potential as small businesses.
Very few people have $600,000 lying around to get started. So how do you get the money for your funeral home business investment? The answer is funeral home financing.
What Are Funeral Home Business Loans
Funeral home business loans serve as financing for purchasing a property, building, equipment, furnishings, payroll, and any other miscellaneous business items or expenses. If approved, borrowers are granted a specific amount of money.
Requirements for a Funeral Home Small Business Loan
Funeral home owners applying for business financing must meet specific requirements for approval. Lenders will look at business credit (ranging from 0-100), personal credit (ranging from 300-850), business lifespan (total length of time the company has been in operation), business health (success and profitability), and collateral (staking valuables against the small business loan repayment).
What Can You Use Funeral Home Business Loans For?
Funeral home financing is similar to other small business loans. Loans can cover a range of activities, from startup costs to leasing property units. Some examples include:
- Embalming Equipment
- Cremation Equipment
- Inventory (caskets, urns, outer burial containers, chemicals, stationery, etc.)
- Hearse/Other Funeral Vehicles
- Employees or payroll
- Purchasing or renting a property
- Construction costs
- Buying out a current funeral home
- Refinancing existing funeral home loans
Types of Funding for Funeral Home Businesses
Funeral homes can avail themselves of many of the same types of loans other small businesses use. Loan programs and lending sources all have advantages and disadvantages, and most funeral homes use a combination of funding types.
Equipment Loans. As the name suggests, equipment loans are loans specifically to purchase new funeral home equipment, such as embalming tools and supplies, incinerators, tables, caskets, etc. When a lender gives a funeral home an equipment loan, they generally retain a security interest on the purchased equipment.
Small Business Loans. Small business loans are general-purpose capital loans similar to personal loans but generally with a lower interest rate. For example, funeral homes can use the funds from a small business loan for almost anything, including real estate, expansion, remodeling, equipment, and even payroll. Small business loans are generally unsecured and require no collateral.
Merchant Cash Advances. A merchant cash advance (MCA) is the small business equivalent of a personal payday advance. Under a merchant cash advance, the lender offers the funeral home cash, which it may spend however it likes.
The funeral home automatically pays the lender a percentage of all credit and debit card sales, plus a pre-determined fee to repay the advance. The APR on merchant cash advances are typically higher than other financing options. However, merchant cash advances are convenient when you need cash quickly or if you’re working on improving your credit score.
Business Lines of Credit. A business line of credit is a revolving, unsecured credit source that operates more like a credit card than a traditional loan. A funeral home is approved for a specific amount of credit, generally somewhere between $10,000 and $100,000, and they may borrow from that amount (and pay it back) on a revolving basis. Business lines of credit are great for purchasing inventory such as urns and caskets, equipment such as tools and tables, and even to cover payroll while the funeral home works toward profitability.
SBA Loans. The United States Small Business Administration (SBA) offers small business loans, called SBA loans, that give funeral homes versatile funding for nearly any business expense. The application process for an SBA loan is less onerous than with traditional small business lenders, and they offer up to $5 million in funding for qualifying businesses.
Tips for Qualifying for a Funeral Home Business Loan
Funeral homes are a niche market. So, not every bank or lender works specifically with funeral home loans. However, a few tips and tricks can help your application process be successful.
Improve Your Credit
Work to increase your personal credit score and lower your debt to income ratio. Credit scores and creditworthiness are complex and slow to react to changes in your financial behavior, but some things you can do to improve your odds of getting a loan include:
- Paying down existing credit cards or loans.
- Increasing your available credit while keeping your total credit utilization low.
Build Up Your Business
Lenders want to see that your funeral home has good odds of financial success. Established businesses can rely on their existing business relationships to demonstrate creditworthiness, but startup funeral homes will have to work a little harder. Some ways to show your financial viability include:
- Preparing a business plan to display your business’s financial health and sustainability.
- Avoiding low bank balances.
- Learning and building your business credit score.
Research Your Lender
Each business lender has specific requirements for determining who qualifies for financing and who doesn’t. Ask your prospective lender what they’re looking for and follow their recommendations. They’re often quite forthcoming with their lending criteria if you ask directly.
What Are the Advantages and Disadvantages of a Funeral Home Loan?
All funeral home loans have their set of pros and cons. Before deciding which financing option is best for you, consider the terms of the loan, the interest rate of the lender, and the potential success of the funeral home.
Funeral Home Loan Pros
- Loan Options. A business loan or other financing options gives you more financial freedom to run your funeral home your way and repay your loans on your terms.
- More Operating Capital. Lenders often work with banks to guarantee loans, and, in turn, banks feel comfortable extending larger loans to businesses that are likely to be successful. For example, funeral homes will always be in demand and thus have a high likelihood of success, making lenders more willing to offer financing.
- Lower Interest Rates. Small business loans generally offer interest rates lower than any personal loans you could get yourself. Of course, if your business doesn’t already have established credit, your interest rate will be based largely on your personal credit score, but you’ll still get a more affordable rate than a personal loan.
Funeral Home Loan Cons
- Variable Rates. Unless you have established business credit, your loan rates will be dependent on your personal credit history. Of course, the upside of this is that your on-time payments on a business loan will help you build your business credit, allowing you to refinance after at least two years of operation.
- Loss of Collateral. Loans based on collateral tend to have lower interest rates and are easier to obtain, but if things don’t go as planned and you’re unable to pay your loan, your lender could seize your operating equipment, driving you out of business.
Frequently Asked Questions About Funeral Home Business Loans
The average funeral costs about $9,000, and cremation service expenses about $350 per service (memorials can also increase the price tag). As a result, successful funeral homes can make a minimum of six percent profit on funeral services provided. The national average suggests that 113 funerals or cremation services and ceremonies occur each year.
It is clear why someone would want to invest in a funeral home business. But what are the startup costs for funeral home financing?
Embalming equipment: $14,000
Preparation room: $10,000
Most small business and niche funeral home loans have lengthy application processes and longer approval processes. However, if there are no hiccups with loan requirements, credit scores, business health, etc., a funeral home loan can be successfully funded within four to six weeks. Shorter wait times of two to three weeks are available for Express Loans. Some financing options have a quicker turnaround. For example, if approved for a merchant cash advance, you can receive funding in as little as one to two business days.
Funeral home loan restrictions are specific to the bank or lender. Most regulations only include how the funds can be spent regarding the business.
Yes. It is possible to receive a funeral home loan without collateral. To do this, your business must have a substantial lifespan and health, and your creditworthiness must be above par.
Both professionals looking to start a funeral home or existing funeral home owners can apply for financing, as long as the individual is using the funds for the business and meets the terms of the loan.
Funding Your Business Is Our Business
Funeral Home Business Loans May Help Grow Your Business
New businesses are not easy to operate. Small businesses like funeral homes can be profitable, but they require a lot of upfront capital. Securing financing for funeral homes is the answer to the problem. Funeral home loans secure those funds and allow you to expand your business in any direction you see fit.
Most small business funding can be spent on any activity in connection to the funeral home, including memorial services. If your funeral home financing is approved, you are on your way to growing your business.
Don’t Allow a Lack of Funding
to Hold your Business Back
It’s Time To Move Your Business Forward!