Loans for Daycare Centers and Preschools

Running a daycare center or preschool takes passion, patience, and strong financial planning. Whether you’re starting a new facility, expanding to multiple locations, or upgrading your classrooms, you’ll likely need outside funding to make it happen.

Thankfully, there are specialized loan and grant options designed specifically for childcare providers — helping you cover startup costs, renovations, staffing, or equipment while maintaining steady cash flow.

This guide breaks down the best loans for daycare centers and preschools in 2025, how to qualify, and tips for choosing the right financing option.

Why Daycare and Preschool Financing Is Important

Opening or expanding a childcare business requires significant upfront investment.

Common expenses include:

• Building or leasing classroom space

• Playground installation and safety upgrades

• Licensing, insurance, and certifications

• Hiring and training staff

• Purchasing educational materials and furniture

• Marketing and enrollment campaigns

Access to the right loan helps you grow sustainably without cutting corners on safety, quality, or compliance.

1. SBA 7(a) Loans – Best for Established Childcare Centers

The SBA 7(a) Loan Program is one of the most popular and flexible ways to finance daycare and preschool businesses.

Loan Highlights:

• Borrow up to $5 million

• Terms up to 25 years for real estate, 10 years for working capital

• Interest rates between 8%–11%

• Down payments typically 10%–20%

You can use funds for:
✅ Buying or renovating property
✅ Expanding or franchising your daycare
✅ Purchasing equipment and playground materials
✅ Hiring staff and covering payroll gaps

Best for: Established centers with steady revenue or franchise childcare businesses ready to expand.

2. SBA Microloans – Ideal for Startups and Small Daycares

If you’re just starting your daycare or preschool, an SBA Microloan offers flexible funding for new entrepreneurs.

Program details:

• Loan amounts up to $50,000

• Average loan size: around $14,000

• Terms up to 6 years

• Interest rates between 8%–13%

Funds can be used for:
✅ Classroom supplies and toys
✅ Licensing and permit costs
✅ Rent deposits
✅ Marketing and branding

These loans are distributed through nonprofit lenders, who often provide business training and mentorship, which is invaluable for first-time childcare owners.

3. SBA 504 Loans – Best for Facility Construction or Expansion

For daycares and preschools investing in new construction or major renovations, the SBA 504 Loan Program is ideal.

How it works:

• 50% funded by a bank

• 40% funded by a Certified Development Company (CDC)

• 10% down payment from the borrower

Advantages:
✅ Long terms (10–25 years)
✅ Fixed, below-market interest rates
✅ Great for property acquisition, building construction, or playground installations

Example:
A preschool purchases land and builds a new 5,000 sq. ft. facility with a 504 loan — paying only 10% upfront and financing the rest over 20 years.

4. Equipment Financing – Affordable Funding for Classrooms and Playgrounds

From nap mats to learning tablets, daycare centers depend on reliable, safe equipment.

Equipment financing helps you acquire furniture, educational materials, kitchen appliances, or outdoor play structures without large upfront costs.

Features:

• Approvals within 1–3 days

• Equipment serves as collateral (no extra assets needed)

• Fixed monthly payments

• Terms from 2–7 years

Best for: Small and mid-sized centers upgrading their classrooms or adding new play areas.

5. Business Lines of Credit – Flexible Cash for Ongoing Needs

A business line of credit gives childcare owners access to revolving funds they can use as needed.

How it works:

• Get approved for a limit (e.g., $50K–$250K)

• Withdraw only what you need

• Pay interest only on the amount used

Use funds for:
✅ Payroll during slow enrollment seasons
✅ Maintenance or repairs
✅ Emergency expenses

Pro Tip: Keep your line open as a safety net for fluctuations in attendance or tuition payments.

6. Childcare-Specific Grants and Community Programs

Many state and federal programs offer grants and low-interest loans to licensed childcare centers.

Top programs include:

• Child Care and Development Fund (CCDF) – Federal program supporting childcare facilities.

• Head Start and Early Head Start Expansion Grants – For early education and low-income childcare centers.

• Local Economic Development Funds – State or county programs offering grants or zero-interest loans for small businesses.

Tip: Visit childcare.gov or your state’s Department of Education site for local funding opportunities.

7. Alternative Online Lenders – Fast, Flexible Financing

If you need funding quickly, online lenders can offer same-week approvals for smaller loan amounts.

Examples include:

• OnDeck – Short-term loans and lines of credit.

• Fundbox – Revolving credit for small businesses.

• National Funding – Working capital loans up to $250K.

While interest rates may be higher than SBA loans, approvals are faster and qualification criteria are more lenient.

Featured Snippet: Best Loans for Daycare Centers and Preschools

1. SBA 7(a) Loans – Best for expansion and growth

2. SBA Microloans – Ideal for startup daycares

3. SBA 504 Loans – For construction and facilities

4. Equipment Financing – For classroom upgrades

5. Business Line of Credit – For flexible working capital

Example: Preschool Expands to a Second Location

Business: Little Learners Academy – Atlanta, GA
Loan Type: SBA 7(a) Loan
Amount: $350,000

Little Learners Academy secured an SBA 7(a) loan to open a second preschool location. The funding covered buildout costs, licensing, and new playground equipment.

Results:

• Enrollment capacity doubled

• Hired 12 new staff members

• Revenue increased 60% within the first year

Owner’s Quote:

“The SBA loan made growth possible without stressing our budget. It gave us the flexibility to invest in what matters — quality care and education.”

How to Qualify for Daycare and Preschool Loans

To qualify, lenders typically require:
✅ Credit score: 650+ (personal or business)
✅ Business plan: Showing enrollment forecasts and expenses
✅ Licensing: State childcare license or application in process
✅ Revenue: Proof of steady tuition income (for existing centers)
✅ Collateral: For larger loans or real estate purchases

Tip: New centers should highlight management experience and community demand in their business plan.

Final Thoughts: Growing a Strong, Sustainable Childcare Business

Launching or expanding a daycare or preschool is both rewarding and challenging — and with the right financing, it’s completely achievable.

Whether you need startup capital, renovation funds, or new playground equipment, programs like SBA 7(a) and Microloans make it easier to invest in your facility and your future.

To explore federal and local funding programs, visit
👉 sba.gov/funding-programs/loans
or childcare.gov for state-level grants and childcare assistance programs.