By Thomas A. Parmalee
Most funeral professionals did not understand the gravity of a Sept. 4 announcement that came from The Bancorp Bank with an opaque headline: The Bancorp Advances Apex 2030 Through Continued Organizational Alignment.
But the team at Homesteaders Life Company immediately grasped the implications of the bank’s decision to restructure its small business lending line and to discontinue retail and wholesale new originations by the end of 2026.
That means Homesteaders must find a new banking partner for its Funeral Home Conventional Loan Program that has grown significantly since it was launched with The Bancorp in 2021.
It also means a restructuring at the bank, which will eliminate 64 positions and 9% of its workforce. An additional 16 positions will be vacated or not backfilled, The Bancorp said.
For Homesteaders, however, it means doubling down on the program by reaffirming its belief that such a program is desperately needed in funeral service.
“We believe there is a real need for greater access to capital in the funeral profession,” said Steve Shaffer, president, CEO and board chair at Homesteaders. “There are significant opportunities for acquisitions, succession planning and reinvestment in existing businesses, but the financing available doesn’t always align with the way funeral home businesses are valued or with the needs of the owners and buyers pursuing those opportunities.”
That was one of the reasons Homesteaders launched the lending program in the first place, Shaffer said.
“We saw a gap between the capital funeral home owners needed and what many traditional lenders were prepared to finance, particularly when a significant portion of a business’s value exceeded the value of the real estate,” he said.
He continued, “Our view of that need hasn’t changed – if anything, this transition reinforces for us why having more institutions that understand funeral service and are willing to invest in it is important. There are good businesses and good opportunities in this profession that deserve access to affordable, sufficient capital designed with them in mind.”
To learn more about how The Bancorp’s exit may affect independent funeral homes looking for access to capital and what the bank’s departure means for Homesteaders, FuneralVision.com reached out to Shaffer.
In responding to the below questions, he noted he sought input from his executive team, including Nick Gerhart, chief operating officer, Courtney Gould Miller, chief growth officer; and Ryan Goins, senior vice president of finance and accounting.
In May 2025 when we last spoke, Homesteaders indicated that the program was on track to reach roughly $125 million in annual lending, while your website now reports $264 million in total loans. How large has the program become, and what are your lending goals for the next three to five years?
We’re approaching $300 million in deployed capital, and our investment in the program has increased every year.
We haven’t set a public lending target for the next three to five years, but we expect that growth to continue. Demand for capital in the funeral profession remains strong, and our ambition is to expand the program’s capacity alongside that demand. The priority isn’t hitting an arbitrary lending number – it’s making sure we have the capital and the right partners in place to support good opportunities when they arise. And, most importantly, making sure we are providing the level of capital necessary to support the variety of independent ownership needs. Given our size and scope, capital capacity is not an issue.
How does Homesteaders balance its role as a preneed insurance company and its role as a lender? What does the lending program accomplish strategically for Homesteaders beyond generating loan revenue?
The expectations funeral home owners have of their business partners have changed significantly over the last 15 or 20 years. They still expect us to deliver strong preneed products, excellent service and a positive claims experience, but increasingly they’re looking for partners that can help them solve broader business challenges as well.
Lending is one way Homesteaders can do that. Because of our financial strength and our long history in the funeral profession, we’re able to invest capital in ways that address emerging needs across the profession. Access to capital is one of those, and the lending program allows us to support acquisitions, succession and investment that can help funeral businesses remain strong for the long term.
Of course, the economics of the program have to work. We’re a mutual company owned by our policyholders, and we have a responsibility to be good stewards of that capital. But when we can generate an appropriate return while also solving a meaningful challenge for our funeral home partners, that’s a good investment for Homesteaders and for the profession.
Does Homesteaders see its lending program as an important tool for keeping funeral homes independently owned? If so, how significant could access to specialized capital be in determining who ultimately owns funeral homes over the next decade?
Absolutely. One of the challenges independent funeral home owners face is finding a buyer with access to enough capital when they’re ready to transition their business. That’s one reason you see owners working well beyond their intended retirement date or ultimately selling to a larger consolidator.
There are excellent consolidators in the profession, including many that Homesteaders works with, and for some owners that is absolutely the right succession path. But other owners want to transition the business to a family member, a key employee or another independent operator. Access to specialized capital with knowledge of and experience in the profession can make those options possible.
We don’t see our role as determining who should own a funeral home. We see our role as making sure lack of access to capital doesn’t make that decision for them. The more viable financing options that good owners and prospective buyers have, the more choice they have in determining the future of their businesses.
Could you give us an example of a type of funeral home transaction that a traditional lender might reject but Homesteaders believes can be successfully financed?
There are so many stories from the last five years that demonstrate what can happen when financing is built around the realities of a funeral home business. One that stands out is Verheyden Funeral Homes in Michigan, owned by Brian Joseph. Their Detroit-area locations experienced catastrophic flooding three times in a relatively short period. It was a strong, well-managed business, but after three floods and significant repairs, Verheyden was running out of financing options. When he came to us, Brian had been turned down by eight banks, and some were recommending that he sell or close the business.
Our lending team looked beyond the immediate circumstances to understand how the business had performed before the floods, the underlying strength of the operation and the value it had built in the communities it served. We were able to structure a refinancing that provided the capital he needed to complete the repairs while significantly reducing Brian’s monthly payments. Our program gave Verheyden room to recover, retain its employees and continue serving families.
That’s really what this program was built to do – look beyond a traditional lending framework and understand the business itself. In Brian’s case, the floods were a catastrophic event, not evidence of a bad business. Understanding that distinction allowed us to structure financing that gave a strong business the opportunity to recover.
Why do you think traditional banks have difficulty understanding or underwriting funeral home goodwill? What is fundamentally different about funeral home businesses from other small businesses?
Funeral homes don’t always fit neatly into the traditional small-business lending model. They generally don’t have significant inventory or other tangible assets that can be easily valued and used as collateral. A substantial part of the value is in the name, reputation, relationships and market position the business has built in its community over decades. That goodwill drives value far greater than the hard assets embodied in real estate, rolling stock and inventory, which often doesn’t fit well in a traditional bank’s lending program.
Funeral service also has some unique economic characteristics. The underlying need for the service is consistent, even as consumer preferences change. Families may choose cremation more often or look for different types of services, but the fundamental need for funeral professionals to care for families at the end of life remains.
Additionally, funeral operators cannot necessarily control volume and revenue generation as they’re often tied to fluctuations in mortality. This can be difficult for banks to evaluate because they expect funeral providers to operate like other businesses with more predictable demand or other means to drive volume increases over the short term.
Understanding how all of those factors translate into the value and financial health of an individual funeral home requires industry knowledge. Our lending team includes people who have owned funeral homes, managed them and worked with their financials. That experience helps us understand what makes a strong funeral business and evaluate opportunities through a different lens than a lender applying a more traditional small-business model.
How important will goodwill financing be to the program going forward?
“Goodwill” is an accounting term that reflects the value of a business beyond the hard assets used to operate it. Funeral homes serve their communities in a way that makes the whole more valuable than the sum of its parts. A significant portion of a successful funeral home’s value isn’t in the building or other tangible assets – it’s in the reputation, relationships and brand equity built in the community over many years.
Financing the whole business is really the only way lending makes sense for our profession, so goodwill will absolutely remain a key part of the program. Traditional lenders can have difficulty financing that intangible value. Because Homesteaders has served the funeral profession for 120 years, we understand the economics of these businesses and can evaluate goodwill as part of the overall investment. That allows us to structure financing around the full value of the business, rather than simply the value of the real estate.
Given the current environment, what are the biggest mistakes you see funeral home owners making when preparing for a loan or acquisition?
The biggest mistake we see is waiting too long to start the conversation. Whether funeral home owners are considering an acquisition, planning for succession or making a significant investment in their business, the earlier they begin thinking about financing, the more options they’re likely to have.
If a funeral home owner knows a business may be coming up for sale in the next few years, waiting until it hits the market to think about financing can put them at a disadvantage. Another buyer may already have capital lined up and be in a much better position to move quickly. The same is true for succession planning. If an owner hopes to sell to a family member or key employee someday, there may be steps they can take years in advance to build equity and structure that eventual transition more effectively.
Financing shouldn’t be the last step in the plan. The earlier funeral home owners start, the more choices they have.
How will existing loans and commitments be affected by The Bancorp’s departure? Will current borrowers notice any changes in servicing, rates, terms or points of contact?
Existing borrowers should not see any changes. Their loans will continue to be serviced under the same rates, terms and payment schedules agreed to at closing.
What happens to funeral home owners who are currently somewhere in the application or underwriting process with The Bancorp? Will their applications simply transition to another institution?
It depends on where they are in the process. Most loans currently under consideration are expected to move forward as intended. Those that are farther along will continue toward closing through our existing partnership with Bancorp. Newer opportunities will progress with Homesteaders while we finalize a new banking partner.
We’re working with each funeral home individually to determine the best path forward and keep the process moving. Our goal is to have a new partner in place by the time those newer loans are ready to close.
Do you expect any interruption in the availability of new loans while a new banking partner is selected and onboarded?
We don’t anticipate a significant interruption. Homesteaders has capital dedicated to the program and remains committed to evaluating and funding new lending opportunities during this transition.
We’re actively working to put a new banking partner in place, and in the interim, we’ll evaluate each opportunity individually and determine the best path to funding. Our goal is to keep loans moving and minimize disruption for funeral home owners. We have a number of interested banking partners, and finding the best fit will take some time, but we do not believe it will be difficult to find a new partner given the success of the program.
What should a funeral home owner who was planning to acquire another funeral home be thinking about right now? Should they proceed normally, wait for the new banking partner or contact Homesteaders now?
We would encourage them to proceed and start the conversation now. Acquisition opportunities don’t necessarily wait for financing, and beginning the process early gives us time to understand the opportunity, evaluate the financing needs, craft solutions creatively and determine the best path forward.
Homesteaders is continuing to evaluate new lending opportunities while we finalize our next banking partner. If a funeral home owner is considering an acquisition, succession plan, refinancing or another significant investment in their business, we’d encourage them to reach out to their Homesteaders account executive rather than waiting for the transition to be complete.
Will the new banking partner essentially step into The Bancorp’s role, or do you envision changing the structure of the program in meaningful ways?
We don’t anticipate making meaningful changes to the structure of the program. After five years and nearly $300 million in lending commitments, we have a strong track record demonstrating that the model works for funeral home owners, Homesteaders and our banking partners.
What we’re looking for is a partner that can step into the banking functions necessary to support the program – helping structure and process the loans, develop term sheets and partner with Homesteaders on funding. We see this as an opportunity to build on a model that has already proved successful, not reinvent it.
You say Homesteaders is evaluating “several financial institutions” as potential new banking partners. What characteristics are you looking for in the next partner that will make the relationship successful?
First and foremost, we’re looking for a partner that understands the funeral profession and the economics of a funeral home business. Much of a funeral home’s value isn’t tied to its real estate or other tangible assets – it’s far greater than that, with value in the goodwill, reputation and brand equity that business has built in its community over generations. Our lending model is designed to recognize and finance that value, so we need a partner that understands and believes in that approach.
We’re also looking for a financial institution with the capital and capacity to grow with us. Demand for the program has continued to increase, and we want a partner that is excited about investing alongside Homesteaders in the future of the funeral profession.
Is there a target date for announcing the new banking partner, and what needs to happen before Homesteaders can resume full-scale lending with that institution?
We’re already in active conversations with several financial institutions that are interested in participating in the program, and we anticipate having a new partner in place in the near term.
Our priority is finding the right partner, not simply the fastest replacement. We need to make sure there’s alignment around the lending model, expectations for the partnership and the operational processes required to support borrowers effectively. We’re encouraged by the conversations we’ve had so far and are working to move that process forward as quickly as we responsibly can.
Are there other types of financing you would like to add that aren’t currently available through the program?
We’re always listening to our funeral home partners and looking for opportunities to evolve the program as their needs change. Right now, our focus is on continuing to grow the financing solutions we already offer and making sure we have the capacity to meet the demand we’re seeing.
Longer term, if we identify a financing need that isn’t being adequately served in the market and we believe Homesteaders can responsibly help fill that gap, we’ll certainly explore it.
Learn more about Homesteaders Life Company’s Funeral Home Conventional Loan Program.
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