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Daycare Business Loans: Best Options for Child Care Businesses

For those who enjoy working with children, operating a daycare is extremely rewarding. But you often need money to keep up with expenses—both large and small—so you can provide the best care possible.

Daycare Business Loans
Christi Gorbett
Freelance Content Marketing Writer

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Childcare facilities provide an invaluable service to families and their communities. Unfortunately, the cost of doing business can place a heavy burden on daycare owners; you need a lot of capital to start, grow, and maintain a childcare business.

The good news is there are many daycare business loans to help ease your financial burden. This guide will introduce you to some of the top lenders and explain how they can help meet your needs; whether those needs are large (like renovating your daycare center) or small (like buying a new swing set), you’re sure to find a financing option that’s right for you.

Our Top Picks for Daycare Business Loans

  • No prepayment penalties and no origination fees
  • Easy application process
  • Monthly fee : 2-9% for 6 month loans, 7.5-18% for 12-month loans, 15.75-27% for 18-month loans
Min. Credit Score
Min. Credit Score 640
Loan Amount
Loan Amount $2K-$250K
Loan Repayment
Loan Repayment Up to 18 months
biz2credit review
  • Multiple loan types available
  • Funding in 48h
  • Soft credit pull
credit score
Min. Credit Score 600+
loan amount
Loan Amount $25K - $6M
loan repayment
Loan Repayment 12-36 months
fora financial logo reviewed on
  • Ideal for plenty of industries
  • Approval not solely credit based
  • Early payoff discounts
Credit Score
Min. Credit Score 550+
Loan Amount
Loan Amount $5K-$750K
Loan Repayment
Loan Repayment 4-15 months
  • Connections to multiple lenders
  • Competitive rates
  • Soft credit check
Credit Score
Min. Credit Score 550+
Loan Amount
Loan Amount $5K-$5M
Loan Repayment
Loan Repayment Up to 30 years

How to Choose the Best Daycare Business Loan

To find the best daycare business loan, you need to evaluate the various options to find which one matches your current financial needs. To do this, use the criteria below; these are the same factors our experts referenced when ranking lenders in this guide.

  • Loan Features: The first step is to evaluate each option based on its features, including loan terms, repayment optionality, and loan amounts. For example, if you need a long-term loan to pay for daycare renovations, you can eliminate lenders that offer only short-term financing.
  • Application Process: You should also evaluate each lender based on how difficult their application process is. Some lenders may rely on a hard credit pull that damages your credit and cumbersome documentation requirements; try to avoid these if possible and focus on lenders who make it easy to apply.
  • Interest Rates and Fees: Spend time looking at the various interest rates and fees charged by each lender. If you want to save money—or have extra money for toys, diapers, and snacks—work with lenders that offer competitive APRs and reasonable loan origination fees.
  • Qualification Process: It’s also vital to check each lender’s qualification process, including the requirements for credit score, annual revenue, and time in business. If you just opened your daycare two months ago but the minimum requirement is 12 months in business, work with another lender.
  • Customer Support: You must also make sure you have access to help when you need it. See if the lender offers support through multiple channels including access to a live customer service rep. It’s also helpful if there are resources available on the lender’s website to answer your questions, such as blog posts and FAQs.
  • Online User Reviews: You can save yourself a lot of time and trouble by checking reviews on independent sites like Trustpilot. Read through comments other customers have left to see if the lender has a favorable reputation. If there are any red flags, move on to a different lender.
  • Perks and Bonuses: You should also consider additional service offerings like payment flexibility, advertising transparency, and advanced technology. If you prefer making payments monthly because that’s how often parents pay for care, don’t borrow from a company that requires weekly payments.

Best Daycare Businesses Loans for 2022 - Full Overview

This section provides details on each recommended lender, including available childcare business loans, their common uses, and loan features; use this information to help evaluate and narrow down your financing options.

1. Kabbage - Best for Line of Credit

banneer Kabbage

A business line of credit through Kabbage offers daycare owners a flexible spending account to pay for various needs. Though applicants with an American Express business card are given priority, you can either apply or get on a waitlist if you don’t already have an Amex account.

Straightforward application and approval process
Debit card provided to access funds
Can choose between six, 12, and 18-month terms
High credit score requirement
Interest rates charged monthly and may be high
American Express business card holders preferred

Kabbage offers a business line of credit to small business owners. Borrowers can be approved for a flexible line of spending up to $250,000 to be used for any necessary expense. Withdrawn funds must be paid back in either six, 12, or 18 months, depending on the terms you select. Monthly fees are charged monthly and fall between 2-9% for 6 month loans, 7.5-18% for 12 month loans, or 15.75-27% for 18 month loans.

Qualifications for a line of credit through Kabbage are rather rigid. In addition to being an American Express business card holder, you must also have a personal credit score of at least 640 to apply. It’s also required that your daycare be in business for at least one year earning a minimum of $50,000 per year

The Bottom Line

A business line of credit through Kabbage is an excellent option for daycare owners who already have an American Express business card. This account allows you to draw as much money as you need up to your credit limit to cover any business expense, planned or otherwise. For example, you could use this capital to advertise your services, pay utilities during slow seasons, or purchase new toys for your play area.

2. Biz2Credit - Best for Commercial Real Estate Loans

banner_ Biz2Credit

Biz2Credit provides business loans for daycare owners who are purchasing new property or renovating their current facility. These loans come with high borrowing limits and extended repayment terms, which allow you to fund your dream daycare facility while keeping monthly loan payments manageable.

Simple and straightforward application process
Quick disbursement within 72 hours of approval
Various loan types available
High borrowing limit of $6 million
Strict loan eligibility requirements
Origination fees of 1% to 6% may be charged
Interest rates can be high

Biz2Credit provides commercial real estate loans to daycare owners in amounts between $250,000 and $6 million. APRs on these loans start at 10% with repayment expected within one to three years. A loan origination fee may also apply.

The qualifications for these loans are rather tough. To be approved for a loan, you must be in business for at least 18 months with a yearly revenue equaling $250,000 or more. You should also have a minimum credit score of 660. Biz2Credit also offers term loans and working capital loans with similar requirements.

The Bottom Line

Commercial real estate loans through Biz2Credit are the perfect solution if you want to expand your current facility or open a new daycare. Loan limits are large, so you can take out as much as you need to fund your new building so you can better serve those in your care.

3. Fora Financial - Best for Short-Term Loans

banner Fora Financial

Fora Financial offers daycare funding up to $500,000, which is a very generous borrowing limit for a short-term loan. Fora Financial lets you use the funds however you need; this is good news for daycare owners who must pay for a wide variety of expenses, including play mats, toys, blankets, snacks, stair guards, and many others.

Easy application with little documentation needed
Loans available to borrowers with poor credit
Funding received in as little as 24 hours
Low annual revenue requirement of $12,000
Interest rates could be higher than other lenders
Repayment terms are limited
Borrowing and origination fees assessed

Fora Financial’s short-term loans allow daycare owners to borrow any amount between $5,000 and $500,000. Interest on these loans is charged at a factor rate between 1.1 and 1.3. That means if you borrow $10,000 at a factor rate of 1.3, the total amount paid back will be $13,000. As a short-term financing option, funds must be repaid within four to 15 months.

The loan qualifications at Fora Financial are very accessible; you only need a minimum personal credit score of 500 to apply. On the business front, your daycare should be open for at least six months earning $1,000 per month for loan approval. However, these flexible requirements come at a cost; Fora Financial charges loan origination fees up to 2.5% and borrowing fees between 10% to 30%

The Bottom Line

If you need funds to cover the costs of running your daycare, then a short-term loan through Fora Financial just might be the perfect solution. Qualification requirements are low, which makes this especially well-suited to someone with a newly-opened daycare who needs funds to build their business.

4. Fundera - Best for Term Loans

banner Fundera

Fundera offers a broad range of childcare business loans, including microloans, commercial real estate loans, business lines of credit, SBA loans, and equipment financing. One of the most popular options among daycare owners is their term loans, which allow you to take out any size loan up to $600,000 and pay it back over several years. This is especially useful when you need to cover large expenses, like putting in a new air conditioner or replacing the roof on your daycare facility.

Borrowers can prequalify with a soft credit check
Access to multiple lenders
Competitive interest rates offered
Borrowers with poor credit can apply
Extended repayment terms provided
Funding could take up to three weeks
Higher APRs for borrowers with poor credit
Loan origination fees may apply

With a term loan through Fundera, you can borrow any amount up to $600,000 at APRs ranging from 7% to 30%. These loans offer extended repayment terms, giving borrowers between one to five years to pay back the loan balance. Loan origination fees between 1% and 5% may also apply.

Fundera works with a variety of lenders, which allows them to offer low qualification requirements. There are no minimum requirements for time in business or annual revenue and you only need a credit score of 550 to apply. However, it’s important to keep in mind that applicants with higher qualifications will qualify for better APRs

The Bottom Line

Daycare business loans through Fundera are an excellent choice if you need quick financing, especially for large expenses like playground equipment, daycare remodeling, and furniture replacement. With their low minimum qualifications, these loans are a great fit for daycare owners with bad credit, limited time in business, or low annual revenue.

5. Credibly - Best for Working Capital Loans


Credibly offers a wide range of financial products including business expansion loans, lines of credit, SBA loans, and equipment financing, but one of the best options for daycare owners is their working capital loans. Working capital loans can be taken in any amount up to $400,000 and used for any business-related expense. This means you can access the cash you need to cover large and small expenses—everything from new playground equipment to diapers.

The application process is simple
Borrowers with poor credit can apply
Various financial products available
You can borrow large amounts
Interest rates may be high
Origination fees charged on most loans
Repayment must be made daily or weekly

Credibly provides working capital loans for childcare businesses in any amount up to $400,000. Loans must be repaid within six to 18 months with interest starting at factor rates of 1.15. That means if you borrow $100,000 at a factor rate of 1.15, you’ll repay a total of $115,000.

To qualify for a daycare business loan through Credibly, there are three major requirements you must meet. First, you’ll need to have a personal credit score of 500 or more. You’ll also need to be in business for at least six months and earn $180,000 per year to be approved.

The Bottom Line

A working capital loan through Credibly is a great choice to cover any expense your daycare may incur, whether big or small. It can be used to resolve any type of cash flow issue you might have, such as making ends meet when enrollment is low over summer and winter breaks.

Best Daycare Businesses Loans - Main Features

The table below shows the various features offered by each lender; use this chart to assess and compare your options.

Min. Credit Score Min. Time in Business Min. Revenue Loan Amount Interest Rate
Credibly 500 6 months $180,000 Up to $400,000 Factor rates from 1.15
Biz2Credit 660 18 months $250,000 $250,000 - $6 million Starting from 10%
BlueVine 600 6 months $120,000
$5,000 to $250,000 0.30% to 1.50% per week or 1.50% to 6.50% per month
Fora Financial 500 6 months $12,000 $5,000-$500,000 Varies
Fundera 550 No minimum requirement No minimum requirement Up to $600,000 From 7% to 30%
Kabbage 640 12 months $3,000 (monthly) Up to $250,000 monthly fees

What Are the Costs of Running a Childcare Business?

Opening a daycare is extremely rewarding, but it does come with its fair share of expenses. Some of the most common costs of owning and operating a childcare business include:

  • Property Rental or Development: One of the biggest costs associated with running a daycare is acquiring property for your business. Regardless of whether you own or rent, the monthly cost could range between $1,000 and $4,000, depending on the size of the building and your location.
  • Equipment and Supplies: You’ll have to purchase a wide range of equipment and supplies to outfit your daycare. For example, you’ll need furniture such as sofas, craft tables, cots, cribs, and changing tables. You’ll also need playground equipment, toys, books, games, and TVs for entertainment plus office equipment and cleaning supplies, too. In total, all of this could add up to $5,500 or more.
  • Payroll: Chances are you won’t be caring for these children all by yourself; you’ll need to hire a few employees. Depending on how many people you hire, average local wages, and the number of hours worked per week, you could end up paying between $3,000 and $10,000 per month.
  • Marketing and Branding: You’ll also need to spend some money on marketing and branding, especially when you first open your childcare business. To build a professional website and advertise locally, you’ll likely spend around $1,500.
  • Business Registrations, Permits, and Insurance: Daycares need to pay for various registrations, permits, and insurance—it’s part of the price of doing business. These should cost you approximately $1,000.

How Can You Use Daycare Business Loans?

Most daycare business loans don’t impose any limitations on how funds can be used. This is good news, considering the widely varying expenses that a childcare facility can incur from month to month. Some of the most common ways daycare business owners use borrowed funds are:

  • Purchase a Daycare Franchise: Buying into a daycare franchise can be a lucrative choice in the long run—parents are more likely to trust a well-known brand name as opposed to an independently run facility. But unfortunately, it costs a significant amount of cash to buy a franchise, which is why many daycare owners secure financing to cover the expense.
  • Acquire an Existing Daycare Business: Another way to get into the childcare business is to purchase an already-existing daycare business from its current owner. This is beneficial because everything is already set up for you, but it often requires outside financing through daycare business loans.
  • Buy Real Estate for a New Childcare Facility: Loans for childcare businesses can also be used to purchase space for a new facility. You’ll likely need a lot of funding to open your daycare, but thankfully there are lenders that offer high borrowing limits to finance your purchase.
  • Make Renovations or Updates: Borrowed funds are often used to make renovations and update interior. If you’ve purchased or leased a building that was never used as a daycare before, it’s likely you’ll need to make some renovations. Even if you’ve long been settled in the same location, building updates and maintenance will be required from time to time.
  • Purchase Equipment or Supplies: One of the most common uses for daycare business loans is to purchase equipment and supplies, such as a jungle gym, room dividers, cubbies, toys, blankets, diapers, highchairs, and kitchen equipment, just to name a few.
  • Improve Cash Flow: Daycare owners can also used borrowed funds to take care of any shortfalls they may experience. For example, if enrollment drops over summer and winter vacation, you may need extra cash on hand to pay for expenses. Thankfully, there are loans available to cover the deficit and keep your business running.

How to Qualify for a Daycare Loan?

Qualifying for a daycare business loan may seem like a challenging task, but it doesn’t have to be; it just takes a bit of advance research and preparation to find the loan that best meets your needs. Here’s what you need to do:

  1. Check Your Credit Score: One of the primary qualifications that lenders check is your own personal credit score. While lenders can look this information up when you apply, it’s a good idea to know what your credit score is before you start the process. That way, you’ll know exactly which loans you qualify for and which ones you don’t before you start filling out applications.
  2. Create a Daycare Business Plan: It’s also recommended that you have a written daycare business plan, not only for loan applications but also to help guide decisions as your business grows. Most business plans contain information on your daycare facility, the services you offer, the cost of operation, a market analysis, and financial projections.
  3. Gather Your Documentation: The next step is to gather your financial documents, including bank statements, tax returns, and cash flow statements. Though documentation requirements vary from lender to lender, it’s wise to pull these together before you apply and have them on hand.
  4. Determine Your Loan Purpose and Amount: Before applying for daycare financing, you should have a clear purpose for the borrowed funds and know how much you need. For example, do you need $3,000 for playground equipment or $300,000 to purchase a daycare facility?
  5. Apply to Matching Lenders: Take some time to sort through the various daycare business loans available on the market. Compare your qualifications to those required by the lender and eliminate any you don’t qualify for. Focus on loans that match your desired loan amount and purpose then apply.

Types of Loans Available for Daycares

There’s a wide range of financial products available to daycare owners. Here are a few of the most popular options:

  • Lines of Credit: A business line of credit is an excellent option for daycare owners because it gives them access to cash whenever they need it—and they only have to pay interest on the amount they withdraw.
  • Term Loans: Term loans are great when you have to cover a large expense—like new furniture or playground equipment—and you need repayment spread out over a couple of years.
  • Working Capital Loans: Working capital loans are a short-term funding option that can be used to cover any expense, big or small—from emergency roofing repairs to play mats and practically everything in between.
  • Business Credit Cards: Though not technically a loan, many daycare owners like having a business credit card on hand to pay for everyday expenses like food, toys, and cleaning supplies.
  • Commercial Real Estate Loans: Commercial real estate loans are the ideal option for daycare owners who are purchasing a new building or renovating an old one. These loans offer large borrowing amounts, lower APRs, and extended terms to make loan payments more affordable.

Grants for Daycare Business

In addition to traditional small business loans, daycares may also have access to additional funding through government and private-sector grants. These funds are often difficult to qualify for and involve a lengthy application process, but the additional financing may make it worth your while.

Government Childcare Business Grants

Childcare is an essential need in every community, which is why the government has established programs to encourage the development of additional daycare facilities. For example, the U.S. Department of Housing and Urban Development offers the Community Development Block Grant Program that funds projects designed to improve living and economic conditions, especially in low-income areas.

Because daycares provide a valuable service, offer employment opportunities, and improve local living conditions, they may qualify for this type of financing. These and other grants are usually allocated at the local level; visit the Childcare Aware of America website and select your state for more details.

Private-Sector Grants for Daycare Business

You may also be able to acquire childcare business grants through the private sector. However, it can be hard to locate information on these grants and learn about the application and qualification requirements. You may need to use a subscription service like Grants to Individuals to help you find the appropriate grants.


As a daycare professional, you know how rewarding it is to work with children; you provide an invaluable service that benefits families and the community at large. But operating a childcare facility isn’t cheap—it requires a lot of capital to cover both large occasional expenditures and small everyday costs.

The good news is daycare financing is readily available; there are many options to choose from, especially among online lenders. All you have to do is sort through the various options, evaluate their features, and find one that meets the needs of your daycare business.

About the Author

Christi Gorbett

Christi Gorbett

Freelance Content Marketing Writer

Freelance Content Marketing Writer specializing in finance, personal development, education, marketing, web development, food & beverage manufacturing, pet, and contracting/home improvement niches.

More about me

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