Case Study · Wisconsin · Funeral Home & Crematory · SBA 7(a)
Funeral Home Feasibility Study, Wisconsin — An SBA 7(a) Worked Case
This is how our independent feasibility study company and consultant team analyzed a ground-up funeral home and on-site crematory underwritten to an SBA 7(a) credit, from service-area death volume and revenue per call through the debt-service coverage a lender must document. It is a representative, anonymized worked example of the methodology — not a specific client deal — set in a growing county-seat community in Wisconsin.
A new funeral home and crematory in a Wisconsin county seat.
A sponsor — an experienced licensed funeral director expanding within a region she already serves — came to our feasibility study company with a ground-up funeral home and an SBA 7(a) lender that needed the projected cash flow independently tested before it would commit. The subject is a new, roughly 10,000-square-foot funeral home with a chapel, preparation room, selection room, arrangement offices, and family lounge, plus an on-site crematory, on a ~3-acre arterial parcel in a growing county-seat community in Wisconsin, drawing from a service area of about 100,000 residents with an age structure that skews older than the state as a whole.
Because a funeral home is a going-concern operating business rather than a passive real-estate play, the lender's question is not “what is the dirt worth” but “can this specific site generate the calls, revenue per call, and margin to service this specific loan.”5 Funeral homes are also named special-purpose properties under SBA rules, which is precisely the condition that turns a discretionary feasibility study into an expected one on a ground-up, no-operating-history deal.10 Our scope was the independent demand, capture, competition, and debt-service analysis that supports that credit.
Representative and anonymized. Every figure below is illustrative of a typical engagement of this type; the site, community, and parties are composited, not a real named borrower, address, or completed transaction.
Service-area death volume, not raw population.
Deathcare demand is driven less by headcount than by resident death volume, the local age structure, and the cremation culture that sets the check per death. The service area holds roughly 100,000 residents skewing older than the state, and its resident mortality — not its growth rate — is the primary value driver.
The United States recorded 3,072,039 deaths in 2024, and the aging baby-boomer cohort supports rising absolute volume for two decades even as the age-adjusted rate falls.4 Locally, an older service area carries a crude death rate near 10.5 per 1,000 — higher than the national age-adjusted 722.1 per 100,000 because the population skews materially older — which on ~100,000 residents implies about 1,050 resident deaths a year.4 The decisive modifier is disposition mix: Wisconsin's cremation rate runs modestly above the national average, on the order of two-thirds of dispositions and rising, tracking the national move from 61.8 percent in 2024 toward an ~80 percent plateau.12 A new, well-located home with an on-site crematory and full memorialization capacity is modeled to a stabilized at-need capture near 30 percent — about 315 calls a year — a defensible new-name placement rather than an incumbent's inherited share. At a blended revenue per call near $5,750, close to the $5,651 a large operator realized per funeral service in FY2024, that supports stabilized at-need revenue of about $1.81 million.35
| Demand driver | Basis | Supported figure |
|---|---|---|
| Service-area draw | ~100,000 residents, older age structure | Rising death volume |
| Crude death rate | ~10.5 / 1,000 (local age structure)4 | ≈ 1,050 deaths/yr |
| Cremation mix (Wisconsin) | ~two-thirds and rising2 | Sets revenue per call |
| Stabilized at-need capture | ~30% of area deaths, new-name entrant | ≈ 315 calls/yr |
| Blended revenue per call | 33% burial / 45% cremation-with-service / 22% direct3 | ≈ $5,750 |
Death-volume logic grounded in CDC/NCHS mortality data and NFDA/CANA cremation data; blended revenue per call built from NFDA general-price-list medians. See sources 1–5. Figures are illustrative of the engagement type; Wisconsin state cremation estimates are directional.
The case-mix line is where deathcare feasibility is won or lost. A traditional burial with viewing runs near $8,300, a cremation with service near $6,280, and a direct cremation roughly $2,200, so the blended check moves sharply with the mix.3 Underwriting a two-thirds-cremation market to traditional-burial revenue per call would overstate cash flow; the model instead weights the mix to the local disposition culture and holds it under mild upward cremation drift across the hold. Owning the retort matters here: an on-site crematory captures the cremation fee the incumbents pay away to a third party, which is what lets a cremation-heavy case mix still carry the margin the credit needs.
Entrenched incumbents, but none with an on-site crematory.
Six providers serve the trade area, and the heritage moat is real: market share in deathcare is built over generations, not bought at opening. But the standing set is aging, succession is unresolved at two of the largest, and not one incumbent operates its own retort — the gap the subject is built to fill.
| Provider | Type | Scale | Distance | Read |
|---|---|---|---|---|
| Incumbent A | Fourth-generation family home | ~350 calls/yr | 1.2 mi | Dominant heritage; no on-site crematory |
| Incumbent B | Family home, two chapels | ~300 calls/yr | 2.5 mi | Aging principal, unresolved succession |
| Incumbent C | Regional consolidator-owned | ~275 calls/yr | 4.0 mi | Corporate, price-forward, thin local ties |
| Provider D | Direct-cremation storefront | ~200 cremations/yr | 3.1 mi | Online, low-price, no service facilities |
| Provider E | Rural single-location home | ~120 calls/yr | 8.5 mi | Trailing-edge, dated facility |
| Provider F | Independent chapel | ~90 calls/yr | 6.4 mi | Niche, limited memorialization |
Competitive set surveyed for the engagement; anonymized. Cremation-share and succession signals were scanned alongside the standing set, consistent with the heritage-incumbency read that governs deathcare feasibility.
The competitive read is deliberately conservative on the moat. Heritage-driven share is very hard to build de novo, and a forecast that assumes a rapid at-need ramp for a new name fails review — which is exactly why the model grades capture from roughly 20 percent in Year 1 to about 30 percent by Year 3 rather than crediting incumbent volume on day one.5 What tilts the read favorable is structural, not promotional: only about 30 percent of funeral homes nationally operate a retort, and none of the six incumbents here does, so the subject's on-site crematory is a genuine cost-and-service differentiator in a market that is already two-thirds cremation.1 Two of the three largest incumbents also carry visible succession risk, the single most acute driver of deathcare share transfer, and the consolidator-owned location competes on price rather than the community relationship a resident director can build.6
Wisconsin macro: aging demand, market-set supply.
The state backdrop is a tailwind for a well-run deathcare operator: an aging population, a deep rural remainder, and no supply gate on funeral or crematory capacity, so the constraint is execution and coverage rather than a permit.
Wisconsin records on the order of 54,000 resident deaths a year, and the demand is concentrated in exactly the older, dairy-and-manufacturing rural remainder outside booming Madison and diversifying Milwaukee — the “America's Dairyland” counties where heritage funeral homes are a fixture and the age structure is oldest.13 Wisconsin is also a non-Certificate-of-Need state for health facilities, and funeral and crematory capacity carries no CON gate at all, so deathcare supply is set by the market rather than a permit; the discipline that matters is sizing to resident death volume and the local cremation culture, not to a transient boom — the same metro-by-metro discipline that separates a defensible Wisconsin study from one that leans on a construction-phase spike it cannot sustain.13
The offsetting reality is the cremation shift. Wisconsin's two-thirds-and-rising cremation rate compresses revenue per call, and a model that ignores the trajectory misprices margin the moment the mix moves.2 Two conditions cut in the sponsor's favor. The preneed backlog is a durable moat in a stable market: roughly $5 billion of preneed is sold nationally each year, the average home carries a backlog around 1.4 times revenue, and about 97 percent of preneeds are ultimately served by the writing home — a book the new entrant begins building from day one under Wisconsin's funeral-and-preneed statute (Wis. Stat. ch. 445).813 And the SBA channel here is deep: a single SBA Wisconsin District Office in Milwaukee administers the program across all 72 counties, with 7(a)-active lenders including Nicolet National Bank, Associated Bank, and First Business Bank alongside national leader Live Oak Bank.12
Why the site captures the service area.
Age structure, drive-time geography, and proximity to the referral network all point the same direction, and they convert resident mortality into at-need calls.
The service area's defining feature is its age structure: a median age above the state average and a fast-growing 65-and-over cohort mean the resident death base rises across the hold rather than fades, the deathcare version of a captive demand engine.4 That older skew is why the local crude death rate sits above the national age-adjusted figure, and why trailing counts understate the base a careful study projects forward rather than extrapolates flat.13
Location does the rest. The subject sits on a visible arterial with the parking and turning geometry a funeral procession needs, minutes from the county's hospital and hospice, the largest churches, and the two principal cemeteries — the referral and logistics network that at-need families move through. A modern ~10,000-square-foot facility with a proper chapel, a comfortable selection room, and reception capacity meets expectations the aging incumbents' dated buildings cannot, and the on-site crematory shortens the disposition chain the market is increasingly choosing. The nearest incumbent's heritage is a real advantage; its lack of a retort, dated facility, and unresolved succession are the openings the site is positioned to convert.
The SBA 7(a) structure.
Total project cost lands at $4.00 million. The 7(a) program can finance the business and the real estate in a single loan, which is why an owner-operated, special-purpose funeral home routes here rather than to a fixed-asset-only 504.
| Cost component | Amount |
|---|---|
| Land (~3-acre arterial parcel) | $0.45M |
| Site work & utilities | $0.30M |
| Building shell & interior (10,000 sf) | $2.10M |
| Crematory build-out (retort, stack, permits)9 | $0.35M |
| FF&E, selection & prep equipment | $0.30M |
| Vehicles (hearse, lead car, removal van) | $0.20M |
| Soft costs & contingency | $0.20M |
| Working capital & fees | $0.10M |
| Total project cost | $4.00M |
Crematory build-out reflects a $135,000–$200,000 retort with stack, air permit, and mercury abatement inside a $270,000–$500,000 turnkey range. See source 9.
| Item | Figure |
|---|---|
| SBA 7(a) loan (85%) | $3.40M |
| Borrower equity injection (15%) | $0.60M |
| Term / amortization | 10-year term / 25-year amortization |
| Illustrative rate | ~10.25% (Prime + 2.75%) |
| Annual debt service | ≈ $378k |
Structure per SBA 7(a) conventions under SOP 50 10 8; owner-occupancy 60% for new construction; single-loan 7(a) cap $5M. See sources 10 and 11.
The equity injection sits at 15 percent, not the baseline 10 percent, and that is deliberate: SBA policy escalates the required injection for projects that are both special-purpose and, as a ground-up build, effectively a start-up, commonly to 15 to 20 percent or more.11 At $3.40 million the loan sits well under the $5 million single-loan 7(a) ceiling, so the structure works within one 7(a) facility without a companion loan.10 On a 25-year amortization at an illustrative 10.25 percent (Prime plus 2.75), annual debt service is about $378,000 — the number the projected coverage has to clear.
One special-purpose condition is worth stating plainly. Because a funeral home is special-purpose collateral, the lender also orders a going-concern appraisal that allocates value separately across land, building, equipment, and intangibles, prepared by a Certified General Real Property Appraiser and dated within a year of issuance — a separate engagement from this feasibility study, not a substitute for it.10 The study exists to support the debt-service coverage the lender must document; the appraisal opines on value. SBA may call for both, and they are not interchangeable in review.
Feasible and bankable, on coverage the credit can document.
The stabilized model builds revenue from at-need calls and the crematory, nets cost of merchandise and operating expense, and carries the coverage to the SBA floor and well beyond.
| Line | Basis | Amount |
|---|---|---|
| At-need service & merchandise | 315 calls × ~$5,750 blended revenue/call3 | ≈ $1.81M |
| Crematory & ancillary | On-site retort wholesale, memorial merchandise & receptions | ≈ $0.19M |
| Total revenue | At-need + crematory & ancillary | ≈ $2.00M |
| Cost of merchandise & cremation | Caskets, urns, vaults, retort fuel & upkeep (~15%) | ≈ ($0.30M) |
| Gross profit | Revenue less cost of goods | ≈ $1.70M |
| Operating expenses | Directors' & staff comp, facility, fleet, marketing, G&A7 | ≈ ($1.13M) |
| Net operating income (NOI) | Gross profit less operating expense | ≈ $567k |
NOI margin near 28% is consistent with owner-operated funeral homes after market-rate director and management compensation; the industry net-profit average runs ~10.3% after debt and owner draw. See sources 3, 5, and 7.
| Year | Stage | NOI | Debt-service basis | DSCR |
|---|---|---|---|---|
| Year 1 | Ramp (interest-only bridge) | ~$366k | Interest-only ~$349k | 1.05 |
| Year 2 | Building | ~$491k | Full amortizing ~$378k | 1.30 |
| Year 3 | Stabilized | ~$567k | Full amortizing ~$378k | 1.50 |
DSCR computed as NOI divided by the period debt-service obligation. See source 11 for the ~1.15x coverage convention.
The stabilized 1.50x coverage is the figure the lender documents, and it clears the SBA's roughly 1.15x floor with real headroom.11 By Year 2 the project already covers fully amortizing debt service at 1.30x. The Year 1 figure of 1.05x is intentionally below the floor — it is the ramp year, as a new-name home builds at-need volume against entrenched incumbents — which is exactly why the structure carries an interest-only bridge through stabilization: the bridge covers the ramp, and permanent, fully amortizing coverage is measured once the home reaches its supportable call volume. Modeling incumbent call volume in Year 1, or best-in-class capture on day one, is one of the most common ways deathcare pro formas fail review; the ramp here is deliberately graded.6
On the equity side, the $0.60 million injection earns growing levered free cash flow — roughly $7,000 in the interest-only ramp year, building past $124,000 a year once stabilized and net of a fleet-and-equipment capital reserve for coaches, the retort, and the building. The exit is valued on a going-concern basis, not a leased-fee cap rate: a funeral home is an owner-operated business, and capitalizing a Year-10 stabilized NOI near $0.65 million on a going-concern basis around 5.5 to 6 times EBITDA inclusive of real estate — the low end of the market's range, reflecting a new-name home that has not yet built the heritage goodwill premium multiples require — implies a gross sale near $3.7 million, and roughly $0.55 million of net equity after selling costs and the outstanding SBA balance.6 The preneed backlog building toward the industry's ~1.4-times-revenue norm is upside the exit does not fully credit.8 The blended result is an illustrative levered equity IRR of about 18 percent over a 10-year hold.
Verdict: financially feasible and bankable. On independently derived demand, a stabilized 1.50x DSCR, and a ~18% levered equity IRR, the projections support the SBA 7(a) credit.
Independent demand, capture, competition, and DSCR stress.
The engagement was scoped the way a credit committee reads it. As an independent feasibility consultant, our role is to test the sponsor's projection against the market, not to restate it — the value of the deliverable is precisely that it carries no stake in the outcome. We derived at-need call volume from resident death rate, age structure, and the cremation trajectory, then placed capture at a defensible new-name share against the heritage incumbency rather than crediting an incumbent's inherited book. Revenue per call was modeled on a graded ramp at a realistic case mix, stressed for a rising cremation share rather than capitalized at a traditional-burial peak.
The coverage analysis was then stress-tested. We ran the debt-service coverage against call-volume and cremation-mix downside — the two variables a funeral home is most exposed to — to confirm the credit still holds when calls ramp slower or the mix shifts further toward direct cremation. Two scope boundaries are worth stating plainly: as the feasibility consultant we reference, but do not perform, the Phase I environmental site assessment addressing embalming-fluid handling and crematory emissions, and we reference, but do not prepare, the special-purpose going-concern appraisal a Certified General appraiser supplies.10 That combination — independent demand, capture, competition, and a stressed DSCR — is what lets the lender rely on the file.14
Representative engagement
This is an anonymized, illustrative worked example of our methodology, built on market data current to 2026; figures are representative of a typical engagement of this type and do not depict a specific client, site, or completed transaction.
Underwriting a Wisconsin funeral home for an SBA loan? Start with the feasibility study.
Feasibility Study Company prepares independent funeral home and deathcare feasibility studies for SBA 7(a) and 504 credits, built to the coverage standard your lender must document. A methodology briefing walks through the death-volume demand, revenue-per-call, competition, and DSCR analysis behind a case like this one, calibrated to your service area and disposition mix.
Request a methodology briefingData sources and dates.
The deal figures are illustrative of the engagement type; the market data that grounds each dimension is real and sourced, drawn from our standing Wisconsin, Funeral Home & Deathcare, and SBA 7(a) & 504 analyses and the primary authorities they cite.
- NFDA 2025 Cremation & Burial Report: 63.4% cremation / 31.6% burial projected for 2025, reaching 82.3% by 2045, all 50 states plus DC above 50% by 2035; roughly 30% of member funeral homes operate a retort and ~36% offer online direct cremation, as compiled in the firm's Funeral Home & Deathcare analysis.
- Cremation Association of North America (CANA) 2025–2026 Annual Statistics Reports: 61.8% (2024) and 62.8% (2025) cremation nationally, decelerating toward an ~80% plateau; Upper-Midwest and Wisconsin cremation runs modestly above the national average. State-level cremation estimates are modeled and directional.
- NFDA 2023 General Price List Study (December 8, 2023): median funeral with viewing and burial $8,300; funeral with cremation $6,280; burial with vault $9,995; direct cremation averaging ~$2,200 nationally (Funeralocity 2025–2026), with competitive metro packages as low as $795–$995. Blended revenue per call built from this mix.
- CDC/NCHS Data Brief No. 548 (January 2026) and No. 521 (December 2024): 3,072,039 US deaths in 2024; life expectancy 79.0 years; age-adjusted death rate 722.1 per 100,000 (2024), down from 750.5 (2023). Local crude death rate reflects an older service-area age structure and is illustrative.
- Service Corporation International (SCI) FY2024 Form 10-K, via Funeral Director Daily (February 2025): realized average revenue per funeral service $5,651 (FY2024) vs. $5,536 (FY2023) on 355,074 services; ~15–16% share; ~$15–17 billion preneed backlog.
- Peak Business Valuation (2024), Creedy & Co. (2024), and DealStream: funeral-home valuation ranges of 2.77x–4.08x EBITDA, 1.99x–3.22x SDE, and 0.57x–0.99x revenue, with 4x–6.5x EBITDA inclusive of real estate for firms under ~$1 million EBITDA; personal goodwill tied to a departing family name is a discount, transferable enterprise goodwill is not.
- Funeral Mavericks citing IBISWorld: average funeral-home profit margin ~10.3% recently, down from a 14.4% average over 2014–2019; ~$1 million average annual revenue; ~40% typical merchandise margin; IBISWorld broader “Funeral Homes” market $20.8 billion (2025).
- Life Insurers Council (LIC) / LIMRA annual preneed survey via Funeral Director Daily (2025), MatrixBCG (2025), and Foundation Partners / Mordor Intelligence (2026): ~$5 billion in preneed sold annually across methods, ~80% insurance-funded and ~20% trust-funded; average preneed backlog ~1.4x revenue; ~97% of preneeds served by the writing home.
- American Mortuary Coolers (2024), After.com, and Funeral Director Daily: crematory retort equipment $135,000–$200,000; $270,000–$500,000 turnkey including building, utilities, stack, EPA/air permits, mercury abatement from dental amalgam, and zoning.
- U.S. Small Business Administration SOP 50 10 8 (effective June 1, 2025) and 13 CFR 120.160(b): a feasibility study is discretionary but expected for special-purpose properties and ground-up projects; funeral homes named special-purpose; owner-occupancy 51% (existing) / 60% (new construction); 7(a) can finance the business plus real estate in one loan; single-loan 7(a) cap $5 million; special-purpose going-concern appraisal allocating land, building, equipment, and intangibles by a Certified General Real Property Appraiser, with environmental reports dated within one year of issuance.
- SBA SOP 50 10 8 with Growth Corp and Bay Street Lending commentary: funeral homes named special-purpose properties; equity injection commonly 15–20%+ for special-purpose and start-up / ground-up projects; SBA DSCR convention of roughly 1.15x or higher; change-of-ownership going-concern valuation required once goodwill exceeds $250,000.
- U.S. Small Business Administration Wisconsin District Office (Milwaukee), administering SBA programs across all 72 Wisconsin counties; 7(a)-active lenders including Nicolet National Bank, Associated Bank, and First Business Bank alongside national leader Live Oak Bank; 504 via Wisconsin Business Development; USDA Rural Development Wisconsin state office (Stevens Point) for the rural Business & Industry path (population under 50,000), as compiled in the firm's Wisconsin market analysis.
- Wisconsin Department of Health Services vital statistics (on the order of 54,000 resident deaths a year; older rural age structure); National Conference of State Legislatures on Certificate of Need (Wisconsin is a non-CON state for health facilities, and funeral/crematory capacity carries no CON gate); Wisconsin regulation of funeral establishments and preneed under Wis. Stat. ch. 445; state economic context ("America's Dairyland," ~$116 billion annual agriculture contribution) via the firm's Wisconsin market analysis.
- Federal Trade Commission (2024): first undercover Funeral Rule phone sweep, conducted in 2023 and reported November 2024, found 39 providers non-compliant, penalties up to $50,120 per violation; the Funeral Rule mandates itemized pricing and telephone price disclosure. Funeral-director and establishment licensing and crematory air permitting are gating requirements referenced, not performed, by the feasibility author.