SBA loans for child care centers and preschools

What lenders check

Each lender sets its own checklist. SBA sets the basic eligibility tests.

A lender reviewing a loan to child care centers and preschools looks at the business's numbers and these items for the trade:

• State license, licensed capacity, inspection history and teacher-to-child ratios, which cap enrollment and revenue
• Enrollment against capacity and the waiting list, plus the share of families paying through state subsidy programs
• Teacher qualifications, turnover and background checks, plus playground safety and insurance for injury and abuse claims

Common uses of the money

Businesses like these use SBA loans for:

• Buying or building a center with classrooms, a fenced playground, secure entry and a kitchen
• Franchise fees and launch costs for a branded early learning center
• Vans, classroom furniture and learning materials for added age groups such as infants or school-age children

Collateral

An owned child care building is the main collateral and is a special-purpose property, while furniture, playground equipment and vans add little.

How much they borrow

60% of these loans were $500,000 or less, the range where SBA Express is available.

The median loan was $385,000, larger than the $150,300 median for all SBA 7(a) loans. Half of the loans fell between $100,000 and $951,150. The most common size band was $500,001 to $1,000,000.

By business age, 46% had operated for more than 2 years and 17% for 2 years or less. 25% were startups opening with the loan, and 12% paid for a change of ownership.

How the money comes

20% of the loans went through SBA Express and 15% were lines of credit. The median term was 10 years.

Across all industries, 36% of loans went through SBA Express and 28% were lines of credit. Express counts here include Export Express.

The median term was 10 years (120 months). For working capital, SBA's maximum term is 10 years. For equipment, it is 10 years, or up to 15 years if the IRS asset class useful life supports it. Source: SOP 50 10 8.1: App. 17, Para. A.1 (p. 390); App. 17, Para. A.2 (p. 390).

Where the loans are

Texas had the most loans, 285 of 2,355 (12%).

Location is the state of the business, not of the lender.

These states have their own page for this industry, with at least 50 loans from October 1, 2019 to June 30, 2026.

• Ohio267 loans
• Georgia241 loans
• Massachusetts125 loans
• North Carolina125 loans
• Colorado107 loans
• Virginia105 loans
• South Carolina64 loans

Compare every state on SBA loans by state.

How often these loans went bad

1.3% of 1,747 seasoned loans were charged off, below the 3.6% rate for all SBA 7(a) loans.

22 of the 1,747 loans approved October 1, 2019 to September 30, 2022 were charged offcharged offThe lender wrote the loan off as a loss because it was not being repaid. by June 30, 2026. By dollars, 0.1% of the approved amount was charged off.

SBA size standard

NAICS 624410 has its own size standard.

For NAICS 624410, SBA's size standard is $9.5 million in average annual receipts. A business at or under the standard is small for SBA's purposes. To qualify, a business must fit the size standard for the applicant's primary industry in 13 CFR 121.201, measured in annual receipts or employees. SBA measures size on the date the application is accepted for SBA processing, or for delegated loans the date the lender approves the loan.

A business over the standard can still qualify under the alternative standard: tangible net worth of $20 million or less and average net income after federal income taxes of $6.5 million or less over the prior two fiscal years. Source: SOP 50 10 8.1: Sec. A, Ch. 1, Para. D.1 (p. 14); Sec. A, Ch. 1, Para. D.2 (p. 14); 13 CFR § 121.301(b)(2).