If you are considering acquiring a funeral home, there are a few key components you should look for in the business. In addition to your personal credit, the lender will be interested in these five elements when examining the loan request.
- Positive Trend. Lenders like to see positive trends when examining a business’s financials. A decrease in sales or revenues can be a red flag. If the funeral home you are looking to purchase has negative trends, be sure you can identify the problems and include ways to increase business in your business plan.
- Business Plan. Buyers have to provide the bank a basic business plan for the business they are acquiring. Lenders want to see that you have a clear understanding of the business you are buying and the death care industry. Plan to include ways to improve the funeral home business where you see fit.
- Key Employees. When purchasing a funeral home, remember the reputation of the business can be considered an intangible asset. The staff and community relationships play an important role in the success of the business. Secure commitments by existing managers, funeral directors and other key staff members. Lenders like to see key employees continue working with the new owner as it diminishes risk.
- Seller Training. Lenders want to see a well-thought-out transition plan. The transition and training period can be anywhere from one to twelve months, depending on circumstances. Work with the seller to negotiate the training and transition up front and clearly define them in the purchase agreement.
- Seller Financing. When a seller finances even a small portion of the deal, it shows the lender that the seller is confident in the new owner’s abilities and leadership. The terms of the seller carry note are negotiated between the buyer and seller.
If you are looking to purchase a funeral home, financing is readily available. Talk to your lender about your loan options and how to prepare for financing.If you are looking to purchase a funeral home, financing is readily available. #ReadMore Click To Tweet
Tim Bridgers – Senior Loan Officer
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