Funeral home loans: SBA rates and eligibility
Funeral Homes and Funeral Services · NAICS 812210 · Program that usually fits: 7(a) and 504
Most funeral home loans finance a change of ownership. A retiring owner sells the business, the building and often the preneed book to a licensed director or a small group. These deals usually run through SBA 7(a) because the purchase mixes real estate, vehicles and goodwill. Lenders focus on annual call volume, the community's loyalty to the family name, and whether preneed funds are properly trusted. Funeral homes have steady demand, so well-run ones are popular with SBA lenders.
Who qualifies
Licensed funeral directors and embalmers buying or expanding a funeral home, crematory or combined operation. Most states require a licensed funeral director in charge, so lenders want at least one owner or key employee who holds the license. Buyers without industry experience usually need a manager with a long track record. Cemeteries selling plots as real estate can face extra review, and nonprofit cemetery associations can't use 7(a).
Which SBA program fits
7(a) for buying a funeral home
One 7(a) loan can cover the building, hearse and other vehicles, goodwill and working capital. When real estate makes up most of the deal, the blended term can stretch toward 25 years, which lowers the monthly payment.
504 for building or expansion
A 504 loan suits building a new chapel, adding a crematory or buying the property. Funeral homes are special-purpose property, so expect about 15% down, and 20% if the business is a start-up.
Express for vehicles and upgrades
SBA Express works for a new hearse, a removal van, livestreaming equipment or a renovation under $500,000. Approval is faster than a standard 7(a), though the maximum rate is the same.
What borrowers use the money for
- Buying an established funeral home and its building
- Adding a crematory or cremation equipment
- Hearses, limousines and removal vehicles
- Chapel renovation and reception space
- Partner buyouts and succession plans
Typical loan amounts, down payment and terms
Funeral home loans usually fall between $500,000 and $3 million, depending on call volume and whether real estate is included. Equity injection is at least 10%, and a seller note on full standby can sometimes count toward it. With the building included, terms often reach 25 years. Without real estate, expect 10 years.
What lenders look at for a funeral home
Lenders start with call volume over the last three to five years and the split between traditional burials and cremations, since cremation lowers revenue per call. They review the preneed portfolio to confirm the funds are held in trust or insurance as state law requires. They also want a transition plan, often with the selling owner staying on, because families choose funeral homes by name and relationships. The appraiser looks at both the business and the building, which has limited alternative use.
Example: a $1,500,000 loan
At today's maximum variable 7(a) rate of 10.00% over 25 years, the payment would be about $13,631 a month. Most well-qualified borrowers get a lower rate. Try your own numbers.
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Today's rate caps
These are the SBA's maximum 7(a) rates with prime at 7.00%. See current SBA loan rates and SBA 504 rates for the full picture.
| Loan amount | Maximum spread | Maximum variable rate today |
|---|---|---|
| $50,000 or less | Prime + 6.5 | 13.50% |
| $50,001 to $250,000 | Prime + 6.0 | 13.00% |
| $250,001 to $350,000 | Prime + 4.5 | 11.50% |
| Over $350,000 | Prime + 3.0 | 10.00% |
Related industries and lenders
SBA lenders active nationwide
Questions about funeral homes loans
Can I get an SBA loan to buy a funeral home?
Yes. Funeral home acquisitions are a common SBA 7(a) use. The loan can include the building, vehicles, goodwill and working capital up to $5 million. Lenders want a licensed funeral director involved, a smooth transition plan and at least 10% equity from the buyer.
How much does it cost to buy a funeral home?
Prices vary widely with call volume, location and real estate. Small rural funeral homes may sell for under $1 million, while busy suburban operations with their own buildings sell for several million. Lenders value them based on cash flow and an independent business appraisal.
Do I need to be a licensed funeral director to get a loan?
Not always personally, but the business needs one. Lenders want a licensed director in charge, either an owner or an experienced employee, and most prefer that at least one buyer holds the license. A buyer with no industry background will face more questions.
Can an SBA loan pay for a crematory?
Yes. Cremation equipment and the building work to house it can be financed with a 7(a) loan or as part of a 504 project. Lenders will check zoning, air permits and projected cremation volume before approving.
What is the down payment on a funeral home loan?
Under current SBA rules a change of ownership needs at least 10% equity. On a 504 loan for special-purpose property like a funeral home, plan on about 15%. Some lenders let part of the equity come from a seller note on full standby.
Sources: SBA 7(a) terms, conditions and maximum variable rates; Federal Reserve H.15 selected interest rates (bank prime loan rate); November 2026 SBA 504 debenture pricing, as published by CDCs; SBA FOIA 7(a) and 504 loan-level data.