Funeral home acquisition loan and DSCR calculator
Lenders size acquisition loans on whether the business can carry the debt after paying the new owner a fair salary. This calculator estimates that coverage ratio for a typical bank loan plus seller note structure.
Acquisition debt service and DSCR check
Estimates annual loan payments and debt service coverage for a financed purchase. Lender policies vary; confirm with your lender and the current SBA SOP 50 10.
Educational estimate only. Not an appraisal, valuation opinion, or loan approval.
What the calculator does
It subtracts your cash injection and seller note from the price to find the bank loan, splits the loan between the business portion and the real estate portion so each can amortize over its own term, and adds seller note payments unless the note is on full standby. It then divides cash available for debt service, which is SDE minus a market salary and a capital reserve, by total annual payments.
Reading the result
A debt service coverage ratio above about 1.25× is a common benchmark in small business lending, though each lender sets its own policy. Below that level, expect the lender to ask for more equity, a longer seller note standby, a lower price, or a different structure. Current SBA rules on equity injection, seller notes, and terms are set in SBA SOP 50 10; confirm the version in effect with your lender.
Inputs that change the answer most
The rate and the owner’s salary assumption move the ratio quickly. Lenders often use a market salary for a licensed funeral director in charge rather than what the seller paid themselves. Putting the real estate on a 25-year term instead of 10 years lowers annual payments meaningfully, which is one reason buyers prefer to buy the building when the numbers allow.
What it does not cover
Closing costs, SBA guarantee fees, working capital needs, and interest-rate changes on variable-rate loans are not modeled. Read SBA loans for buying a funeral home for the full lender checklist, including licensing, preneed, and environmental review on crematory sites.