The market for funeral home financing is mostly composed of local independent funeral homes. There has been a trend, beginning in the late 1990’s for some larger successful funeral homes to consolidate. A few are national companies serving many regions of the country. However this is the exception. The majority of funeral homes serve a local region where the customs and traditions of caring for the deceased and surviving family members are well known.
Funeral homes are among the most successful small businesses. This industry has the lowest failure rate of any industry of just 1%. This business does not have excessive problems with debt collections that plague many industries due to the sensitive nature of the services offered. Most family members feel a sense of honor in handling a loved one’s funeral obligations. This emotional connection provides a feeling of obligation to the funeral services provider. Therefore as a business owner, you have less problems collecting all revenues due you.
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Commercial lenders know this and are usually more than willing to provide you the business financing that you require. What are the types of financing that you are most likely to need in the operation of your funeral business?
You may require receivable financing at regular intervals depending up your cash flow and the volume of business. Many families will not be able to afford the full cost of a funeral upfront. An average funeral cost is around $12,000 or more. Many people will have to finance the expense over time. Some people will also have to wait for insurance policies to pay off before you can get the money due you.
You can see that if yours is a small home, a few funerals will quickly eat up your cash flow. To overcome the cash flow crunch, you may be able to obtain financing by using your receivables as collateral.
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The funeral home business requires equipment that is specialized and unique for the proper care and handling of the deceased. You may require the access to both equipment financing and equipment leasing providers in order to obtain and replace equipment as your business grows.
Hearses, flower transports and family limousines are all specialized vehicles for which you will need financing and leasing options. These vehicles are known to be some of the best maintained of any business vehicles. Nevertheless, sooner or later you will have to replace them, if for no other reason than to maintain an up-to-date image.
You may be able to obtain funeral home financing for other purposes, such as start-up, expansion and acquisitions also.
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