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Daycare Business Loans: Best Options for Childcare Centers

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
Written by:Christi Gorbett
Freelance Content Marketing Writer

Many or all of the products featured here are from our partners who compensate us. This may affect which companies we write about and where the company appears on a page. However, any analyses, or reviews expressed in this article are those of the author’s alone, and have not been approved or endorsed by any partner.

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.

There are many small business loans you can use to ease your financial burden. Our team of expert reviewers has thoroughly analyzed and evaluated some of the top lenders. We will share our findings and provide our expert recommendations on how they can help meet your needs. Whether your 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.

Daycare Business Loans: Best Options for Child Care Businesses

Top Picks for Daycare Business Loans

To find the best daycare business loan, you need to evaluate the various options to find which one matches your current financial needs. In this review, we highlight the terms, rates and fees of each lender and explain what makes them a good option. We also share potential downsides of each lender, and provide a rating methodology you can use to select the best option for your needs.


Best Daycare Businesses Loans for 2023 - Full Overview

Best Overall
Lendzi logo

Lendzi - Best for Businesses With High Revenue

Factor Rate
Starting at 1.10
Loan Amounts
Up to $4 million
Min. Annual Revenue
Key Features
  • Borrow up to $4 million in working capital
  • Min. credit score: at least 500
  • Min. time in business: 6 months
  • Equipment financing up to $2 million
  • Business line of credit up to $250,000
  • See your options without hurting your credit
  • Flexible terms: 3 to 15 months
  • Excellent customer reviews on independent review sites
  • Get funding in as little as 24 hours
Pros & Cons
  • Easy online application
  • Many loans and lenders to choose from
  • Excellent customer ratings
  • Flexible terms
  • Competitive rates
  • Bad credit is accepted
  • Income requirements may be high
  • Interest rates higher with poor credit
  • Phone calls required after applying

Lendzi specifically works with borrowers with high revenue that have previously been denied a loan. Lendzi was founded in 2020 and has since funded more than $500 million. They are a direct lender in addition to a lending marketplace, which gives them access to dozens of loans and lenders. Whether you need a small loan to cover operating expenses or you’re in need of a total revamp for your daycare, Lendzi just may be able to get you the funding you need.

Main Features
Lendzi has three products that may fit your needs - working capital loans, merchant cash advances, and equipment financing. Working capital loans and merchant cash advances go up to $400,000 with terms of three to 15 months. Equipment financing allows you to borrow up to $2 million to purchase equipment, and terms range from 12 to 84 months. Both options offer competitive rates. If your credit score is in the 600s, you may qualify for short-term loans, long-term loans, or a business line of credit. Business lines of credit are up to $250,000 with terms of six or 12 months. Rates start at just 6.20% for 26-week terms. In addition to credit score, Lendzi prefers you have six months of business history and an annual income of $180,000. Applying takes just a few minutes, and once you submit your application, a representative will be in touch to review your specific options.

If you have high revenue daycare business and are looking for a loan, look no further than Lendzi. The lender makes it their mission to provide funding to businesses who may be denied elsewhere. Plus, they have more than 2,000 5-star reviews on sites like Google, TrustPilot, and Better Business Bureau, making them not only our top pick, but also the top pick of customers just like you.
Backd business loans

Backd - Best for Cheapest Interest Rates

Factor Rate
Starting at 1.10
Loan Amounts
Up to $2 million
Min. Annual Revenue
Key Features
  • Borrow up to $2 million
  • Min. Credit Score: 640
  • Min. Time in Business: 2 years
  • Industry best factor rate for MCA - as low as 1.10
  • APR for the Line of credit product starts at 35%
  • Flexible repayment terms up to 16 months
  • Get funding in as little as 24 hours
  • Check your rate with a soft credit pull
Pros & Cons
  • Easy online application
  • Instant lending decision
  • Fast funding times
  • Large loan amounts
  • Flexible payment options
  • Must be in business at least one year
  • Not available for all industries
  • Rates not disclosed

Backd offers daycare businesses working capital loans and business lines of credit that are tailored to your specific needs. A daycare business has a unique business model, and Backd can work with you to make sure you receive the right type of funding for your business. Founded in 2018, they work with small businesses who need funding quickly and don’t want to deal with traditional banks and lenders.


Main Features
Backd working capital loans range from $10,000 to $2 million with terms up to 16 months. Payments are flexible and are made daily, weekly, or semi-monthly. Backd business lines of credit range from $10,000 to $750,000 with unlimited terms. You do not need collateral for either option, simplifying the process and getting you access to funding quicker. To qualify, you need to be in business for at least two years, have $300,000 or more in annual revenue, 640 or higher FICO score, be based in the U.S., and have a business bank account.

If you need a daycare business loan but don’t want to hassle with traditional banks, Backd may be the lender you need. They are willing to work with your unique situation to ensure you get a loan that will meet your needs. It takes just a few minutes to apply and only a soft-pull is done on your credit. Once you receive your offer, you can take the time to review the terms and conditions prior to deciding whether or not you’d like to move forward
SMB Compass

SMB Compass - Best for Variety of Loans

Interest Rates
Starting at 7.99%
Loan Amounts
$10K - $10 million
Min. Monthly Revenue
Key Features
  • Loans up to $10 million
  • Min. credit score: can go as low as 550 for certain loans
  • Min. time in business: 1+ years in business, no startups
  • Funding times: 5 to 7 days for term loans and 24 - 48 hours for line of credit
  • Flexible terms: 2 – 10 years for term loans
  • Interest Rates: starting at 8.99% for term loans
  • Applying does not impact credit score
  • Nine loan products to choose from
Pros & Cons
  • Low, competitive rates
  • Large loan amounts
  • Loan terms up to 25 years
  • Excellent customer service
  • Poor credit not accepted
  • Not available in all states
  • Must be in business at least one year
  • High revenue requirements

Running a daycare can be costly, and SMB Compass understands that. If you’re not sure what type of daycare loan you need, SMB Compass may be the solution you’re looking for. Representatives are available M-F to guide you through the process and help you choose the right loan for your business, whether that’s a small business line of credit or a large, business term loan to renovate your space. To qualify, you need to have a minimum credit score of 650, be in business at least one year, and have $20,000 per month or more in revenue.


Main Features

SMB Compass offers nine different types of small business loans to daycare businesses. Their mission is to make loans more accessible to small business borrowers by providing cost-effective and flexible lending solutions. SMB Compass business loans range from $10,000 to $10 million with terms up to 25 years. Rates start at 7.99% for qualified borrowers. The lender has currently provided more than 1,200 U.S. businesses with more than $250 million in financing. To apply, simply fill out their easy online application. It takes just a few minutes and will not impact your credit score. If approved, funding can be dispersed within 24 hours.

SMB Compass has strict qualifications compared to other lenders, but their multitude of products are top-notch. If you meet the requirements, they could be the best lender for you. Loan amounts are high, rates are competitive, and terms are flexible (up to 25 years). Contact SMB Compass today to learn more!


Interest rates
Starting at 6.2%
Loan Amounts
Up to $250K
Min. Annual Revenue
Key Features
  • Funding up to $250,000
  • Min. credit score: 625
  • Min. time in business: 6 months
  • Interest rates starting at 6.2%
  • Loan Repayment 6-12 months terms
  • Quick and simple application
Pros & Cons
  • Leninant credit requirements
  • Competitive interest rates
  • Fast funding times
  • Not available in every state
  • Short repayment terms

Bluevine is a financial technology company that specializes in business lines of credit. With a line of credit, you can borrow money when you need it up to your set credit limit. You only pay interest on the amount you borrow each time. If you’re unsure of exactly how much funding you need for your gas station, this loan option should be on your radar.

Main Features

Lines of credit from Bluevine range from $5,000 to $250,000 with a starting APR of 4.8%. The term length is rather short, ranging from six to 12 months. Lines of credit are best used to cover gaps in revenue or to cover one-time expenses, such as purchasing new equipment or expanding your business.

To qualify for a line of credit from Bluevine, you’ll need a minimum credit score of 625, a minimum monthly revenue of $10,000, and a business history of at least six months.

If flexible financing is important for your gas station business, a Bluevine line of credit is a smart choice. Bluevine offers competitive rates, excellent customer service, and a simple application that can be completed in just a few minutes.

National Funding - Best For Equipment Financing

Factor Rate
Starting at 1.10
Loan Amounts
Up to $500K
Min. Annual Revenue
Key Features
  • Min. Time in Business: 6 months
  • Min. Credit Score 600
  • Borrow up to $500,000 in working capital
  • Equipment financing up to $150,000
  • Factor rate From 1.10
  • Fast funding
  • Early payment discounts
  • Equipment financing repayment 2-5 years
  • Working capital repayment 4 months - 2 years
Pros & Cons
  • Check your offers without any impact to your credit
  • Receive your money via direct deposit within 24 hours
  • Positive reviews and reputation
  • No special interest loans
  • High annual revenue requirement
  • No mobile app

National Funding’s equipment loans may be useful if you need to buy new or used equipment for your daycare center. This may include changing tables, cots, rocking chairs, gliders, lockers, cubbies, and strollers. You can get approved for up to $150,000 and won’t have to put any money down.


Main Features
National Funding’s equipment loans cap out at $150,000 with terms between two and five year years. The pay rate starts at 1.10 and repayments are monthly. For a chance at approval, you’ll need a credit score of at least 600, at least two years of business history, and $250,000 or more in annual revenue.

If your daycare has been around for a while and you could use some cash to upgrade old equipment, an equipment loan from National Funding can be a great choice. You won’t have to come up with a down payment and may get approved for up to $150,000.
biz2credit review

Biz2Credit - Best for Commercial Real Estate Loans

Interest rates
Starting at 7.99%
Loan Amounts
$25K to $500K
Min. Annual Revenue
Key Features
  • Working capital up to $2 million
  • Term loans up to $500,000
  • Term loan interest rate starts at 7.99%
  • Loan Repayment 12-36 months terms
  • Variable APR depending on the applicant
  • Funding in 72 hours
  • Soft credit pull
Pros & Cons
  • 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 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.


Main Features
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.

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.

Main Features of The Best Daycare Businesses Loans

SMB Compass4.5
National Funding4.1
  • Min. Credit Score - 500
  • Min. Time in Business - 6 months
  • Min. Annual Revenue - $180,000
  • Loan Amount - Up to $400,000
  • Interest Rate - Factor rates starting at 1.15

How to Choose the Best Daycare Business Loan

  • 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.


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:

  • 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.
  • 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.
  • 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.
  • 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?
  • 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 unsecured 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.


*The required FICO score may be higher based on your relationship with American Express, credit history, and other factors.

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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