SBA lenders approved 300 7(a) loans to funeral homes and funeral services (NAICS 812210) from October 2023 to June 2026, $301,949,800 from 97 lenders. The median loan was $637,500, more than four times the national $150,300, at a median rate of 9.5% against 10.25% nationally, over a median term of 192 months. Acquisitions were 32.7% of loans, about three times the national 10.4%, with a median of $1,312,800. Lenders focus on call volume across several years, the funding of preneed contracts, licensing, the real estate, and how the home keeps its families once the seller steps away.
| Measure | Funeral Homes and Funeral Services | All industries |
|---|---|---|
| SBA 7(a) loans approved | 300 | 162,355 |
| Median loan | $637,500 | $150,300 |
| Middle half of loans | $180,000 – $1,471,000 | $50,000 – $500,000 |
| Loans of $1 million or more | 35% | 12.9% |
| Median rate at approval | 9.5% | 10.25% |
| Middle half of rates | 8.5% – 10.5% | 9.3% – 11.25% |
| Acquisitions (change of ownership) | 98 (32.7%) | 16,849 (10.4%) |
| Median acquisition loan | $1,312,800 | $693,000 |
| Lenders that made these loans | 97 | 1,648 |
| SBA 504 loans (real estate, equipment) | 41 | 16,714 |
Approvals FY2024 – FY2026 to date (1 Oct 2023 – 30 Jun 2026), cancelled loans excluded. Source: SBA 7(a) and 504 FOIA loan records, as of June 30, 2026.
- SBA 7(a) loans approved
- 300 (Oct 2023 – Jun 2026), from 97 lenders
- Median loan
- $637,500 (national $150,300)
- Median rate at approval
- 9.5% (national 10.25%)
- Median term
- 192 months
- Acquisitions
- 98 loans (32.7%), median $1,312,800 at 8.75%
- SBA 504 loans
- 41, median $551,000
Large, long loans, and most of them are about a building or a sale
Funeral homes borrow big for a small-business trade. The middle half of loans ran from $180,000 to $1,471,000, 105 loans (35%) were $1 million or more, and the 90th percentile was $2,470,050. The median term of 192 months, sixteen years, is longer than the ten-year limit on working capital and goodwill, which points to real estate, financed for up to 25 years, in the typical loan.
| Figure | Funeral homes | National | Reading |
|---|---|---|---|
| Median loan | $637,500 | $150,300 | More than four times the national median |
| Median rate | 9.5% | 10.25% | Three-quarters of a point lower; middle half 8.5% to 10.5% |
| Acquisition share | 32.7% | 10.4% | About one loan in three buys an existing home |
| Acquisition median | $1,312,800 at 8.75% | — | Purchases often include the building |
| SBA Express share | 18.7% | — | Small Express loans are the exception here |
| Start-ups | 7.3% | — | New homes are rare; families choose on reputation |
| Franchises | 0.3% | — | Almost every home is independent |
Size and collateral explain much of the rate. Loans above $350,000 fall under SBA's tightest variable-rate cap, the base rate plus 3%, and a loan secured by a building prices better than one secured by goodwill alone. Only 14% of loans were fixed-rate, so most of these borrowers carry rate risk for the life of a long loan; the trade-off is in fixed vs variable business loans.
Length has a cost of its own. On 7(a) loans of 15 years or more, prepaying more than 25% in any of the first three years costs 5% of the prepaid amount in year one, 3% in year two and 1% in year three. At a median term of 192 months, at least half of funeral home loans are inside that rule. See SBA's prepayment penalty.
How lenders read a funeral home's earnings
The unit of a funeral home's business is the call: each death the home serves. Lenders ask for calls by year, and by type of service, for at least three years, because revenue per call is where the industry's long shift toward cremation shows up. A home can hold its call count and still see revenue fall if more families choose direct cremation over a traditional service.
| Source of revenue | What drives it | What the lender asks |
|---|---|---|
| Traditional funeral with burial | Service fees, casket and merchandise, vehicles | Share of calls, and whether it is shrinking year over year |
| Cremation with a service | Service fees, urn and merchandise, crematory fee | Whether the home owns its crematory or pays a third party |
| Direct cremation | A low, often published price | Volume against margin; a rising share lowers revenue per call |
| Preneed sales | Contracts sold today, performed later | How the contracts are funded and what they commit the home to |
| Trade work for other homes | Embalming, removals or cremation for other firms | Concentration in a few customer homes |
Funeral homes are not seasonal the way retailers are, and deaths do not follow the economy, which is part of why lenders like the industry. What they discount is the owner's pay. Many homes are run by a family who take their compensation in ways that are hard to separate from the business, and lenders rebuild earnings with a market salary for the director who will actually run the home. See the buyer's salary in acquisition coverage.
Preneed: the promise that comes with the business
Families prepay funerals, and most states require that money to be held in a trust or funded through an insurance policy until the service is needed. A funeral home's preneed book is two things at once. It is future business: families who have already chosen the home. And it is an obligation: services the home must perform, sometimes at prices agreed years earlier.
- Funding. Lenders ask for a schedule of outstanding preneed contracts, how each is funded, and the current value of the trust or policy against today's cost of performing it. A shortfall is a real cost even if it never appears as debt.
- Compliance. State regulators examine preneed trusts. A home with late deposits or an unresolved exam finding has a problem the lender will not finance around.
- In a sale. The buyer inherits the contracts. The purchase agreement should say who bears any funding shortfall, and the lender will read it.
A preneed book is only an asset to a lender once the funding schedule shows it is fully backed.
Buying a funeral home
98 loans financed a change of ownership, at a median of $1,312,800 and 8.75%. Many sellers are retiring owners, some the second or third generation of the family whose name is on the door. The detailed guide is financing a funeral home acquisition; what is specific to SBA is below.
- The seller leaves. In a complete change of ownership the seller may consult for up to 12 months (up to 24 months under SOP 50 10 8.1 from 1 October 2026) but may not stay as an owner, officer or employee. In a business where families call because they know the director, that window is the transition plan, and the lender will ask how the buyer uses it. A seller who wants to stay on is a different deal; see partial changes of ownership.
- The license. States license funeral directors and, in most cases, the establishment itself, and a home typically needs a licensed director in charge. A buyer who is not licensed needs one employed before closing, and a crematory needs its own permits.
- Goodwill and its term. A home's reputation is most of its value above the building. From 1 October 2026 change-of-ownership loans amortize over no more than 10 years except the real estate share, so the goodwill portion can no longer be stretched over a blended longer term and carries a heavier payment. See financing goodwill.
- Coverage. From the same date a change of ownership must show debt service coverage of 1.25x on historical results, with financial due diligence on every purchase and a quality of earnings report on acquisitions of $3 million or more excluding real estate.
The standard SBA terms apply: an equity injection of at least 10% of total project costs, a seller note counting toward half of it only if it is on full standby for the life of the loan, no earnout, and an independent business valuation wherever the amount financed, less appraised real estate and equipment, exceeds $250,000. See SBA's business valuation requirement and buying from a retiring owner.
The building
Many funeral homes are in converted houses on residential streets, with preparation rooms, chapels and parking built on over decades. Appraisers often treat them, and especially a home with a crematory, as special-purpose property: few other businesses could use the building as it stands. That limits what a lender will count it for, and on an SBA 504 loan a special-purpose property needs 15% from the borrower rather than 10%. The industry's 41 SBA 504 loans had a median of $551,000; see SBA 7(a) vs 504 and buying a business with its real estate.
Zoning matters too. A home operating as a nonconforming use in a residential zone may not be able to expand, or rebuild after a loss, and lenders read the zoning letter along with the appraisal.
Preparing a funeral home's file
SBA's list: business tax returns for 2–3 years, a P&L and balance sheet with a year-to-date P&L through last month-end, a debt schedule with copies of notes being refinanced, and personal tax returns and a personal financial statement for each owner of 20% or more. A purchase adds the home's latest full year of figures and the letter of intent.
For a funeral home, add calls by year and by service type, the general price list, the preneed schedule with trust or policy statements, the most recent state examination, the director and establishment licenses, crematory permits if any, a vehicle list, and the property's appraisal and zoning. Transparent builds that into a lender package that sets out call volume and preneed funding the way an underwriter reads them. On SBA loans the lender pays Transparent, not the borrower.
Common questions
- How large is a typical SBA loan to a funeral home?
- The median 7(a) loan to funeral homes from October 2023 to June 2026 was $637,500, with the middle half between $180,000 and $1,471,000. Loans to buy a home had a median of $1,312,800.
- Can the retiring owner stay on after I buy the funeral home?
- Not as an owner, officer or employee in a complete change of ownership financed by SBA. The seller can consult for up to 12 months, or up to 24 months under SOP 50 10 8.1 from 1 October 2026.
- How do lenders treat preneed contracts?
- As both future business and a liability. They want a schedule of every outstanding contract, how it is funded, and whether the trust or policy covers today's cost of performing it.
- Why are funeral home loans so long?
- Most include the building, which SBA finances for up to 25 years. The median term was 192 months, so at least half of these loans run 15 years or more and carry SBA's prepayment penalty in their first three years.
- Does a buyer need to be a licensed funeral director?
- Not necessarily, but the home needs a licensed director in charge from the day of closing. A buyer who is not licensed must have one employed, and the lender will ask who it is.