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Funeral Home Financing

Updated on March 6, 2016
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Stephen Bush is the founder and CEO of AEX Commercial Financing Group. Steve obtained his MBA from UCLA and is a U.S. Navy veteran.

Funeral Home Financing
Funeral Home Financing

Help for Obtaining and Refinancing Funeral Home Loans

This article is designed to provide candid and practical help for funeral home financing. During the past several years, it has become increasingly obvious that funeral home loans are among the most difficult forms of business financing and commercial loan refinancing.

These business lending difficulties should cause commercial borrowers to ask some serious questions. For the most part, these common business finance problems are avoidable with appropriate and timely action.

Why is business financing so hard to obtain for specialized businesses such as funeral homes?

Ask the Right Questions!
Ask the Right Questions!

Funeral Home Financing and Refinancing

Problems for Both New Purchases and Refinancing Business Debt

There are some serious potential problems found with funeral home mortgage loans that are not usually apparent in other commercial mortgages. When funeral home financing primarily entails business refinancing, business owners should expect that it will probably be more complex than acquisition business financing, especially in the current lending environment. The commercial real estate loan value is often less than the business value for funeral home business loans. This disparity can result in reduced business financing because many lenders will offer a commercial loan that includes only the commercial property loan value.

Because refinancing funeral home loans has become increasingly difficult, it will be prudent for current owners of funeral homes to explore this issue well before they actually need to refinance their own commercial loan. This examination would also be an opportune time to review the potential for reducing overall business debt levels through various strategies as negotiation.

The process of refinancing business loans and working capital loans has become more critical to small businesses that are trying to deal with reduced sales and cash flow. In some cases commercial borrowers are attempting to secure additional cash, and in other situations they are being forced to refinance an existing loan by the current lender. With both short-term commercial funding and long-term commercial real estate loans, refinancing difficulties are currently occurring. There are four scenarios that are particularly difficult to refinance:

  1. SBA loans (Small Business Administration)

    Dealing with the SBA must always be evaluated in the context of working with a specific commercial lender as well. Any form of SBA financing is ultimately only as good as the bank involved. In the current banking environment, banks are certainly not all the same. With regards to SBA loans, the importance of dealing with a "good bank" is even more important.

  2. Refinancing of existing commercial credit lines

    During the past several years, this problem has grown from bad to worse.

  3. Business opportunity financing (without commercial real estate)

    This specialized form of commercial financing was always difficult even in the bygone days of easier-to-find bank loans.

  4. Small business loans when sales have been decreasing

    This particular commercial financing problem area is even more pronounced for specialized commercial properties such as funeral homes.

Fortunately, not all banks have gone to the dark side. Unfortunately, it is hard to tell the good ones from the bad ones without some help.

Is There a Problem With Banks?

The Problem with Banks
The Problem with Banks

The rationale for the saying, "Banks are the problem, not the solution" is explained very effectively by this book.

Funeral home loans are more specialized forms of commercial financing. With the recent poor state of small business loans made by banks, it should not be a big surprise that funeral home financing is now even more difficult in comparison to the period before 2008 (when this form of commercial mortgage loan was already problematic).

Managing financial risk is a key component for funeral home financing and other forms of small business loans. This is a very helpful and informative discussion of what is both a complicated and essential aspect of managing any business.

Precisely because funeral home financing is so difficult, this has seemed to invite questionable practices from some financial companies. It is not at all unusual for potential funeral home business loan lenders to charge upfront fees of $30,000 (and some are higher) before the lending process even begins. Commercial borrowers should take extra precautionary steps for all funeral home loans, both for new purchases and refinancing.

The New Normal — Not As Good As It Sounds

Did you know that everything is back to normal in the banking world? As just one shining example of what that really means in bank language, the Washington Post did an investigative story during the first quarter of 2013 about one of the new normal ways that banks are earning their money these days. Would you believe payday loans that cost the victims, I mean customers, annualized rates of interest around 300 percent? No wonder that most banks have lost interest in making paltry rates of return for small business loans and commercial mortgages.

The moral of this story is that taxpayers bailed out the banking industry and only got a lousy t-shirt in return. The bailout proved to be a good thing for the banks but not anyone else.


Difficult challenges for both acquisitions and refinancing are typical for funeral home financing.

— Stephen Bush

Funeral Home Financing Poll - Please Express Your Opinion About Funeral Home Loans

From numerous perspectives, all forms of small business financing are currently difficult to obtain from most banks. Please vote in the poll below with your opinion as to whether specialized commercial financing such as funeral home financing is even more problematic and harder to obtain than small business loans for less specialized small businesses. Or (in your opinion) is everyone in the same boat and therefore you feel that all forms of commercial loans currently available to small business owners are roughly comparable in the "level of difficulty" for getting a bank to say "Yes"?

Small business mortgages (purchases and refinancing) for specialized properties such as funeral homes and golf courses are currently much more difficult to obtain than commercial loans for less specia

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The Need to Consider New Business Lenders

Whatever the specific financing situation, commercial borrowers should approach the process with a realization that there might not be the usual obvious solutions for refinancing commercial loans and working capital financing. In order to successfully refinance commercial debt such as a funeral home loan, many business owners will need to consider both new commercial financing programs and new commercial lending sources. Whether you like change or not, be prepared to go in a new direction.

Solutions for Funeral Home Financing
Solutions for Funeral Home Financing

Limited Availability of Suitable Lending Options for Funeral Home Financing

Availability of suitable lenders for this specialized type of business loan is rapidly shrinking. The prudent choice of a lender will be a prime factor in securing a viable funeral home mortgage. As the saying goes, with fewer eggs in the basket, it is mandatory that you watch them more carefully!

Business Negotiating Tips

Funeral Home Loans and Other Specialized Business Financing

Among the most difficult small business finance situations for commercial borrowers are specialized commercial properties. Substantial challenges for commercial refinancing and acquisitions are typical for funeral home mortgages.

Thanks for Visiting Funeral Home Financing -- All images provided under End User License Agreement to Stephen Bush
Thanks for Visiting Funeral Home Financing -- All images provided under End User License Agreement to Stephen Bush

© 2009 Stephen Bush

And now, your thoughts on the subject...

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    • profile image

      JoshK47 5 years ago

      Good information!

    • profile image

      anonymous 5 years ago

      Impressive lens. Addresses a subject people need to address but often don't have it spelled out to them in an easily understandable way. Advice can be modified to apply to more than just funeral home business.

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      creditcure 7 years ago

      Nice, Informative and valuable information. If you have a time, check out my lens too. Thanks!

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