Finance for funeral professionals

The UK's funeral market is estimated to have an annual value in excess of £2.7billion annually, with more than 600,000 funerals being conducted each year by an estimated 4,000 funeral director businesses.

The need for funeral services continues to rise in line with the country's ageing population. 2020 saw a spike in death rates which have begun to normalise but will remain steady. Industry forecasts suggest annual growth in the funeral industry to remain at around 4.8%.

Why run a funeral business?

With the cost of an ordinary funeral starting at around £4,000 and averaging closer to £10,000 there is ample scope for profitable undertaking services.This means that the undertaking industry still offers opportunities for people with the necessary skills to set up, buy and grow an independent business.

The large corporates may have an important part to play, but there will always be a need for individual service. In the UK it's estimated that there are around 7000 funeral companies, with two-thirds of this figure comprised of independents and the rest owned by Co-Op and Dignity. As many as 75% of independent funeral providers still have fewer than ten full time employees. 

As an independent funeral director, you will, of course, need a wide range of skills. You may also need financial support to start up or buy into a business, to refurbish an existing firm. , You may also need finance to buy limousines and hearses, or buy new funeral or mortuary equipment or simply to deal with cashflow or simply to fund your tax bill.

At Rangewell we work with both established and new funeral directors across the UK to find finance for funeral providers. 

Understanding your funeral finance options

Getting the most appropriate funding solution will depend on your particular business needs.

You may need to acquire premises, equipment or vehicles, deal with operating costs, or fund expansion or acquisition plans. Getting the right type of funding for each purpose can be essential to help reduce your costs and to safeguard your business.

We're experts in finance for professional services here at Rangewell, so we can introduce you to the whole range of funding options, from lenders operating across the entire UK market. By helping you understand which options are available and how they impact your application, you'll be able to choose a more suitable finance option. 

Setting up a new funeral business

In an industry dominated by small local businesses, often with a wealth of local connections and a traditional place in the community, it may seem difficult to consider starting a new undertaking firm.

However, it is not impossible. Recent years have seen a growing demand for alternative funeral arrangements, and there is now a demand for undertakers who are able to offer a range of non-traditional services. These range from those with motorbike and classic car hearses to eco-friendly interments, and ‘Life Memorial’ funeral services.

These new concepts provide scope for niche providers to enter the industry. A growing demand for more affordable funerals may also offer opportunities for starting a new business - being able to offer a unique selling point could help you secure a niche market.

Costs when starting a new business

Both new and traditional style funeral businesses will face a range of expensive demands on your starting capital. There will be premises to pay for, funeral cars to purchase, shopfitting, marketing costs, business costs and staffing etc. You may also need to pay for arrangement costs with a chapel of rest. 

It may be possible to lease your premises, but because of the specialised nature of the business, you may be forced to to buy suitable premises, perhaps from an existing undertaking business that is closing down.

There will also be substantial equipment costs. Exactly what you require will depend on the services you offer, but the basics may include vehicles, refrigeration and embalming facilities.

You’ll also have trained staff to pay and operating costs to deal with. Although casual staff can be called in as needed, you will need a driver, and at least one trained assistant even for the smallest undertaking business.

You may need working capital to keep your practice operating until it becomes profitable, which could mean having months of operating expenses to cover.

Electricity and business rates will have to be paid for, and you will need to make the community you serve aware of your existence. You need to invest in local marketing and, these days, this must include setting up a website. If you operate a specialist funeral service, you may need to advertise further afield.

Funding to set up a funeral business

Your actual funding requirements will depend on your ideas for your new business. You should be able to calculate your needs as part of a detailed business plan.

Whatever the scale of your funding needs, lenders may be able to provide solutions such as Secured or Unsecured loans to help you meet them.

Contact us to discuss the funding you'll need to start your funeral business.

Buying an existing funeral business

However, if you are an experienced funeral professional, you may wish to buy an existing undertakers business.

This could mean joining as a partner or buying outright, perhaps from an owner who is retiring. Both will need you to have a clear view of the true value of the existing business. You will need to agree on a cost based both on the turnover of the existing business and the value of its equipment, premises and vehicles. You may also need to consider the potential of the business, to understand whether the price demanded is a reasonable one.

While you, as a professional in the industry, may be best qualified to assess both the assets and the potential of the business, you should have your solicitor look at the structure of the business and any contracts involved, and have your accountant review the accounts.

The purchase price will reflect this, and even a relatively small business in the south of England could easily change hands for £250,000 - £400,00.

Funding to buy an undertaking business

Buying an existing undertaking business may require a substantial investment, but it may be possible to arrange a small business loan to provide the necessary finance.

Secured Loans can be used to borrow large sums upwards of £250,000, and so may be more suitable for the sums involved in a business purchase. They are called ‘secured’ because the lender will require the pledge of security from you in case you cannot pay the loan back. This may often be your home.

You can have longer to repay than other types of loans and terms of up to 20 years are common. You can also enjoy lower interest rates than with other types of lending, meaning monthly repayments can be lower and easier to fit in with your cash flow.

A loan large enough to let you buy an established business will require considerable preparation, so it is important to know the facts early.

Contact us about funding to buy a funeral business.

Running and growing a funeral business

If you have joined an existing practice as a partner or become the owner outright you will probably need to invest for the future. The funeral industry is highly competitive and even a business that is currently running well and producing a good level of profit needs funding if it is to remain so.

Vehicles need to be maintained and constantly updated. The bereaved expect clean and well-maintained surroundings in your premises and you may find you need to offer additional services such as promession or webcasting.

You are in business to answer your clients need at a difficult time, and being able to offer the facilities that they request is essential for your business as well as for them.

Fortunately, solutions exist to finance virtually any investment you need to make in your business exist.

Contact us to discuss funding to develop your funeral business.

Funding for your premises

Your funeral business may require several types of premises - secure parking for vehicles, workshops and storage and a chapel of rest may all be required. You will need an office and a reception area.

These may all be in the same location with a traditional undertaking business, although it is now becoming more common to reduce costs by spreading a business across locations which are purpose-built for each need. Providing parking and vehicle preparation facilities in the central retail location appropriate for your front office is a major expense.

Buying premises to act as a reception, while relegating vehicles and storage to a leased unit in an industrial park may provide a sensible compromise. You may need to borrow the deposit on a long-term lease. To buy premises, you may need to consider a Commercial Mortgage. Commercial Mortgages can help you buy your premises or even an existing business, however, it is uneconomic to borrow less than £50,000, and some lenders will have a minimum borrowing requirement of £75,000 or more, but there is no set upper limit.

Commercial Property Finance is always arranged on an individual basis.

Raising funds with a Commercial Mortgage

If you already own your funeral directors site or offices, a Commercial Mortgage might actually be a cost-effective way to raise funds to use elsewhere in your business. By taking

Get our help finding the most competitive lender. 

Funding for your equipment

Whether you are starting up, buying into an existing business, or ready to move your current operation on, specialist equipment is vital.  

Your equipment needs may include:

• Mortuary equipment - Refrigerated units, trolleys, lifts
• Workshop equipment - woodworking equipment, Engraving equipment
• Embalming equipment - units, sluices
• IT equipment - handheld tablets with a centralised system for reception, together with operating licences and renewals, training and maintenance

At Rangewell, we have found that Asset Funding can often provide the most cost-effective solutions for the majority of equipment you will use. Leasing and Hire Purchase both let you spread the cost of the equipment you need, with fixed monthly repayments helping you to budget with confidence.

Hire Purchase

For basic equipment that you want to go on giving service for many years, Hire Purchase may provide the simple way to spread costs.

With Hire Purchase, you pay a deposit along with monthly instalments over a fixed term, often between 12 and 72 months, after which the equipment becomes yours.

The fixed payments make it easy for you to plan ahead and also arrange an agreement that is tailored to your monthly turnover and budget.

Leasing

If you want to use the latest equipment without the responsibility of owning it, leasing will give you the freedom and flexibility you need. There is usually no upfront cost to find, meaning that you can bring the latest equipment into your surgery without delay.

Finance leases can make higher cost items, such as a hearse or high-tech equipment, more affordable by spreading the cost across their economic life.

Funding for vehicles

The vehicles used by the undertaking profession are expensive investments. They may be purchased outright for long service, using Hire Purchase or other loans.

Business Contract Hire is an alternative which may be used to provide the specialised vehicles you need. Costs are based on the purchase cost, less the value of the vehicle after the contract period, and which will substantially reduce the costs of operating new prestige hearses and limousines by your business.

Vehicle finance can be used for:

• Buying a second car
• Change of existing vehicle
• Purchase of classic cars and hearses
• Purchase of a first call vehicle
• Purchase of a mortuary ambulance
• Purchase of a fleet of vehicles
• Purchasing a funeral fleet of limousines and hearses
• Releasing equity from your existing fleet

You can find out more about your Asset Finance options here.

New or used equipment 

Good quality used equipment can be a sound investment, especially if you are setting up a new business and funds are tight. However, many businesses simply miss out on the potential savings because they believe they need to find cash to pay for new equipment.

At Rangewell, we can help you spread the cost of used as well as new equipment with Asset Finance. The terms and rates we can secure are often better than those offered by equipment suppliers, and we may be able to help arrange a single agreement to cover all your equipment needs.

Refinance your existing assets

Your undertaking business may have considerable investment tied up in your existing assets, especially your hearses and limousines. Asset Refinance lets you release that money, while still having full use of your assets. The finance company will first buy an asset such as your vehicle fleet from you. This will provide you with a large cash sum, which you are free to use as you need.  

The lender then lets you buy the asset back from them, under a new finance arrangement.

A refinance agreement can help you raise the cash tied up in your assets or, alternatively, you can arrange refinance on an asset you are still paying for, so you can reduce your monthly outgoings. Find out more here.

Other types of funding for your funeral business

There are many other reasons to seek funding. You may want to refurbish your premises, or set up a branch in a nearby town to help bring additional business.

You might also need to deal with more pressing costs. Cashflow may be below expectations or you might have tax bills to deal with.

At Rangewell, we know all the solutions available and we can work with you to find the finance that is most appropriate for your needs.

Unsecured Loans

Unsecured business loans operate much like a personal loan which can be used in any way you wish. They are suitable for smaller sums, usually below £250,000. The loan is then repaid in monthly or quarterly instalments over an agreed term which is usually under 5 years.  

One of the advantages of an Unsecured Loan is that they can be made available quickly. Decisions can be made inside one working day with some lenders, but you will need to provide a Personal Guarantee. This means that you will become personally liable for the debt if your business was unable to pay.

Tax Loans

Tax is an issue for every business and a large quarterly VAT or annual tax demand can cause problems for your cash flow, especially when it falls at the same time as other costs.

Tax Loans are there to help you to spread the cost of your tax demands into affordable monthly payments, helping ensure that your business does not have to go through a cash flow drought.

Benefits of a Tax Loan include:

• Better control of cash flow
• Fixed monthly payments
• Quick and simple to arrange
• Avoids issues with HMRC and potential penalties

Working Capital Finance

Working Capital Finance is designed to boost the working capital available to a business. It's often used to provide cash to pay staff and suppliers while business is slow during the early weeks and months of a new business, or during a period of growth. It is usually designed to be repaid in the short- to medium-term, once your business is fully on its feet.

Growth Finance

Large-scale finance can be vital if you have major plans for your business, such as acquiring a competitor. Growth Finance is a special type of funding which is designed to work to fund any growth plans you have. Lenders may require you to have an established trading history and record of profits, but it may be possible to arrange Growth Finance based on your profit projections rather than on your trading history.

Get our help finding the most appropriate lending for your needs.

Alternative business funding for funeral directors

Many businesses now consider alternative business funding, particularly when they are looking at the costs of setting up. Crowdfunding and Venture Capital have become more popular. However, costs can be high, raising the funds you need can mean long delays or even fail altogether. You may run the risk of losing control of your business with some types of funding. Fortunately, we can help you find better alternatives.

A new generation of business lender has sprung up, which can adopt a more flexible approach to lending.

Online lenders may be able to provide fast lending with the minimum paperwork. Other specialised lenders can provide loans to businesses that are outside the criteria of mainstream business lenders.

Find out more about alternative funding here.

How we help you capitalise your funeral business

Finding the most appropriate solution for your funding needs requires a thorough understanding both of the lending market and the products available on it.

At Rangewell we have the expertise you need. We know the lenders who can offer the most competitive rates for the undertaking profession and we find solutions for all types of finance, including solutions such as Unsecured & Secured Loans, Invoice Finance, Asset Finance, Merchant Cash Advance, Commercial Mortgages, Growth Finance plus many more.

Whether you have a relatively straightforward finance need or require something more complicated such as a ‘Jigsaw’ funding plan made up of a combination of products, we can work with you to find the answers

Call us now to get our experts working for you.