How to Get an SBA Loan to Start a Daycare: A Step-by-Step Guide

Starting or expanding a daycare business requires significant funding. Fortunately, the Small Business Administration (SBA) loan program offers financial assistance to help childcare providers succeed. Whether you’re opening a new daycare center or improving an existing one, an SBA loan for daycare businesses can provide the necessary capital.

In this guide, we’ll walk you through the application process, eligibility requirements, and tips for increasing your chances of approval.

Why Choose an SBA Loan for Your Daycare?

The SBA offers several loan options, but the SBA 7(a) loan and SBA 504 loan are the most popular for daycare centers. These loans provide:

• Low-interest rates compared to traditional loans

• Longer repayment terms (up to 25 years)

• Flexible use of funds, including real estate, equipment, payroll, and operational costs

If you want a loan with favorable terms, an SBA childcare business loan is an excellent choice.

Step 1: Determine Your Eligibility

Before applying, ensure you meet the SBA loan requirements for daycare businesses:

✔️ Operate a for-profit daycare center

✔️ Have a strong business plan

✔️ Maintain a good credit score 

✔️ Show financial statements proving profitability (or strong projections for startups)

✔️ Have some personal investment in the business

Step 2: Choose the Right SBA Loan

• SBA 7(a) Loan: Best for working capital, equipment, and facility renovations

• SBA 504 Loan: Ideal for purchasing daycare real estate or large assets

• SBA Microloan: Good for startups needing $50,000 or less

Each option has unique requirements, so research which fits your needs.

Step 3: Prepare Your Daycare Loan Application

To apply for an SBA daycare loan, you’ll need:

✅ Business plan: Include market research, revenue projections, and marketing strategies

✅ Financial documents: Tax returns, profit and loss statements, and balance sheets

✅ Personal and business credit reports

✅ Collateral information: Real estate, equipment, or other assets

✅ Daycare licensing and certifications

A well-prepared application improves approval odds.

Step 4: Find an SBA-Approved Lender

SBA loans are issued through banks, credit unions, and online lenders. Use the SBA Lender Match tool or contact local banks that specialize in childcare business loans.

Step 5: Submit Your Application and Wait for Approval

Once you submit your loan application, the lender will review your creditworthiness and business viability. This process can take a few weeks to a couple of months. Be ready to provide additional documents if requested.

Bonus Tips to Improve Approval Chances

✔️ Boost your credit score before applying

✔️ Reduce existing debt to improve financial health

✔️ Demonstrate demand for childcare services in your area

✔️ Show strong cash flow projections in your business plan

Final Thoughts

Applying for an SBA daycare loan may seem overwhelming, but with proper preparation, you can secure the funding needed to grow your childcare business. Start by determining your eligibility, gathering documents, and finding the right lender.

Check out our funding ready daycare financial template that’s customized and funding ready for your loan application.