Owning a funeral business demands a diverse set of skills, both practical and compassionate. While funeral professionals devote their careers to serving families during life’s hardest moments, they also face complex business realities. Whether acquiring your first location, expanding to new markets or preparing for succession, one question looms large — how will you finance the next step?

The financial landscape for funeral home businesses has evolved dramatically. Where once lending options were limited to real estate-based loans or small government programs, today’s professionals have access to a broader range of financing options designed to support both growth and transition. Yet with more choice comes more complexity. Understanding how each financing option works — and which fits your goals — is key to securing a loan that positions your business for long-term success.

The challenge: Financing beyond the building.

Historically, funeral professionals seeking to buy or expand a business encountered a major roadblock: lenders are willing to fund the property, but not the intangible value that truly drives profitability.

In any acquisition, the purchase price reflects two core components — tangible real estate and goodwill, which is the intangible value of the business’s reputation, community relationships and brand. For many funeral providers, goodwill represents a substantial share of overall value. Unfortunately, it’s also the portion traditional lenders have been least willing to finance.

That left many funeral providers with limited choices: conventional and Small Business Association (SBA) loans.

Conventional loans.

A conventional business loan is issued directly by a financial institution. These loans generally offer a lump sum that the borrower repays in fixed installments over a set term.

For financially stable buyers with strong credit histories, conventional loans can offer competitive interest rates and flexibility. However, most banks view funeral home acquisitions as higher-risk because of their specialized nature and heavy goodwill component. That means borrowers often face stricter qualification requirements and limited loan-to-value ratios.

Pros:

• Competitive interest rates (for qualified borrowers)
• Predictable repayment schedules
• Flexible use of funds

Cons:

• Require strong credit and personal collateral
• May exclude goodwill financing
• Often limited to real estate-backed loans

SBA loans.

SBA loans are designed to make business lending more accessible. Under this structure, the SBA guarantees a portion of the loan, reducing the lender’s risk.

For funeral professionals, SBA loans can be appealing due to longer repayment terms and lower down payments compared to traditional commercial loans. However, the maximum loan amount of $5 million can be restrictive for buyers pursuing larger acquisitions or chains.

Pros:

• Lower down payment
• Longer repayment terms (up to 25 years for real estate)
• More flexible credit qualifications

Cons:

• Loan maximum of $5 million
• Lengthy and documentation-heavy approval process
• Typically require personal guarantees

Conventional loans can cover buildings and equipment, but not the goodwill portion. SBA loans can fill part of the gap, but their $5 million cap often falls short for larger or multi-location acquisitions.

As a result, well-qualified buyers are sometimes unable to meet the loan requirements — not because of creditworthiness or business potential, but because financing structures fail to reflect the realities of the funeral profession.

A new category: Conventional loans for funeral home goodwill.

In recent years, a new lending structure has emerged to fill the space between traditional and SBA financing — a specialized conventional loan designed exclusively for funeral providers.

These programs recognize that a funeral home’s value often lies more in goodwill than in physical assets. By considering the full value of the business — not just the real estate — banks are able to offer financing solutions with loan amounts typically ranging from $5-20 million.

This type of financing reflects a shift in how lenders view the profession. By considering goodwill a legitimate component of value, these loans make it possible for qualified buyers to complete larger transactions or refinance existing debt to unlock growth for their businesses.

Such programs are typically best suited for:

• Multi-location acquisitions
• Funeral home and cemetery combinations
• Larger single-site purchases exceeding SBA limits
• Refinancing of high-interest or partial real estate loans

These new conventional programs are reshaping what’s possible for funeral professionals who once faced financing roadblocks.

In the next part of this blog series, we’ll dive into how to evaluate which financing option is best for you, as well as how and when to begin your financing journey.