Top Questions You Need to Ask Your Potential Lender

Ask Your Potential Lender

You’ve decided it’s time for financing for your funeral home, and you’re ready to contact a lender. Maybe it’s time to update your current facilities, refinance current debt, or buy another location. So how do you decide which lender is right for you?

Here are a few questions to ask prospective lenders:

Ask about their funeral service credit policy.

First, do they have one? If not, it’s likely that your loan will be put into the category of “just like other real estate loans we finance,” which might impact your ability to receive a timely or favorable response to your loan request. Working with a lender who understands the details and jargon of the funeral industry will help simplify the process.

Ask whether any similar loans funded were for start-ups or existing businesses.

Determine what kind of experience the applicants were required to have in order to meet the lender’s management requirements. Different lenders will have different requirements or preferences when it comes to the borrower’s experience in the funeral industry. Also, understand the terms of the loan and any loan covenants.

Ask about their loan-to-value, equity, reserve and cash deposit requirements in terms of getting a loan approved.

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Ask about the loan size criteria.

This will allow you to determine if your project size fits.

Ask how long it takes for approval.

Ask whether the lender has the ability to portfolio the loan.

If participant lenders are needed, the number of underwriting approvals your loan will undergo is affected.

Ask about outside requirements.

Are there any monthly deposits and compensating balance requirements?

Obtain a good understanding of the paperwork process …who does what, who makes the loan decision, who closes the loan and most importantly, who will service the loan after closing.

Ask if the loan loans below are available for your loan type.

-Loan terms up to 25 years and no balloon payments

No loan covenants

-Loan approvals in as little as a week

Choosing a lender who understands the funeral industry and your business will help you achieve your goals. Not having to explain terminology and nuances of your business allows more time to establish a meaningful business relationship.