Funeral home start-up loans and finance

• Premises. An arrangement office that families are comfortable visiting, ideally with a chapel of rest. The planning position for mortuary and chapel use needs checking before you sign a lease, as does whether the landlord will permit it.
• Care of the deceased. Refrigerated storage, a hygienic preparation room and, if you embalm in-house, the equipment, ventilation and clinical waste arrangements that go with it.
• Vehicles. A private ambulance or removal vehicle for collections, and a hearse. Limousines are often hired in at first.
• Fit-out and stock. Arrangement room furnishing, signage, a small stock of coffins and urns, and funeral management software.
• Compliance and insurance. Public and employer's liability, vehicle insurance, and the standardised price information the CMA's Funerals Order requires every funeral director to publish.
• Working capital. Disbursements such as cremation and burial fees are usually paid by the funeral director and recovered from the family later, sometimes after the estate is released. Even a few funerals a month can tie up a meaningful sum.

Many new independents reduce their initial borrowing by not owning everything on day one. Trade fleet operators hire hearses and limousines with drivers by the funeral. Some areas have shared care centres or trade mortuary services that look after the deceased on behalf of smaller firms. Coffins can be bought from suppliers as each funeral is arranged rather than held in stock. Each of these costs more per funeral than owning the equivalent, but they keep fixed costs low while volumes build, and they mean you borrow for things that are already earning. When volumes justify it, a vehicle or a mortuary can be financed on the strength of real trading figures.

The most common difficulty is slower growth than planned, combined with fixed costs that run every day whether there are funerals or not. Buying a new hearse and installing a full mortuary before volumes exist creates repayments that the business cannot yet support. Personal guarantees put your home and savings at risk if the business fails, so borrow for the minimum you need and add capacity as the work comes. Membership of a trade association such as the National Association of Funeral Directors can help with standards, training and credibility with families and lenders alike. If an established firm nearby is for sale, compare the cost of starting from scratch with buying an existing funeral business, where the volumes already exist.

Borrowing of £25,000 or less by sole traders and small partnerships can be regulated consumer credit, which brings additional protections.