Common Questions About Funeral Home Financing
Prospective borrowers often ask several common questions about funeral home financing:
- Where can I find a funeral home business loan?
- What interest rate can I expect?
- How long will my loan term be?
- How much will my loan cost me in fees?
- How do I start the loan process?
- What information will I need to provide the lender?
- How long does the financing process take?
Interest Rate on a Funeral Home Business Loan
Red Flags to Watch Out For
Loan Term Depends on Proceeds
Fees Depend on Type of Loan
Fees on funeral home business loans depend on the type of loan. For an SBA-backed loan, the fees are minimal. A packaging fee of not more than $2,500 is normal. The SBA guarantee fee paid by the lender and built into your loan amount is a little over 2% of the loan amount. Commercial loans will often have what’s called and origination fee. This fee can vary depending on the lender and is normally 1% to 2% of the loan amount. The other fees involved are closing costs and include real estate appraisals, environmental inspections, business valuations, surveys, title searches, transfer taxes and closing attorney fees.
Application Process Relatively Easy
The process of applying for funeral home loans is relatively easy. You will need to submit the basic terms of the proposed deal. This can come in the form of a term sheet or signed letter of intent. You will need to submit the tax returns and current year financials of the business you are buying “target business.”
Closing a Funeral Home Business Loan
Closing a funeral home business loan with real estate normally takes an estimated 90 days and one without real estate about 60 days. The main reason for this difference is that real estate needs to be appraised and inspected. Appraisers often take four to six weeks once the reports are ordered. If it takes two weeks to get your loan approved and the appraiser takes 6 weeks, that’s already 8 weeks into the process.