Financing for childcare centres
Fees are steady, ratios are fixed, and growth means space. Almost every childcare file is about the room or the people in it.
How the money reads
An underwriter reads six months of statements. This is what yours usually says.
- Parent fees arrive monthly; subsidy payments arrive on their own schedule.
- Enrolment is near capacity or it is not, and the account shows which.
- September is a step change. August rarely is.
The thing that slows these files down
Subsidy and parent fees often land from different sources. Send everything: a file missing the subsidy side looks like a centre at half occupancy.
What it usually pays for
- A build-out, a playground, a second room
- Hiring ahead of an enrolment you can already see
- Bridging the gap while subsidy payments catch up
What an underwriter asks
The same four things decide every file: revenue and how long you have been making it, the cash cushion, bounced payments, and what you already pay other lenders. Here is what those look like in this trade.
- Where does the subsidy land?
- Parent fees and subsidy often arrive from different sources, sometimes into different accounts. A file missing the subsidy side reads as a centre running at half occupancy.
- How full is the centre?
- Enrolment is near capacity or it is not, and the account shows which. Ratios cap the revenue a room can produce, so a lender is reading occupancy as much as growth.
- What does September do?
- Enrolment steps up in September rather than drifting. Six months ending in August miss it entirely, which is worth a line if that is the window you are sending.
The whole method, in one page: giving yourself the best shot.
Asking for the right amount
A build-out or a new room has a cost — ask for it. Hiring ahead of enrolment is a number of months of wages, and describing it that way prices better than a round figure.
Across every trade the anchor is the same: roughly a month of revenue, and never more than the statements support. Everything you already pay lenders counts toward a ceiling of 20% of monthly revenue, so what is already running matters as much as what you are asking for.
When to ask
Spring, for a September you can already see. Hiring and space both have lead times longer than the funding does, and the funding is the part that takes a business day.
Have these ready as well
On top of the standard file — six months of statements, your incorporation documents, your CRA business number and photo ID.
- Your provincial childcare licence and current capacity
- Statements for every account, including the one subsidy is paid into
- The lease, for a build-out or a second site
- Criminal record checks and insurance certificates where the province requires them on file
What usually fits
In this order, more often than not — though the file decides, not the trade.
Term loans
A fixed amount, a fixed schedule, and nothing pledged against it. The straightest answer when you know the number and the timeline.
$5,000 – $2,000,000
Revenue-based line of credit
Draw what you need, pay for what you draw, and the limit moves with what you turn over. For months that are uneven rather than short.
Up to $500,000
Equipment financing
The oven, the van, the line. Financed against the thing itself, so the payment sits against what the thing earns.
$10,000 – $1,000,000
Where these files get harder
None of these is an automatic no. They are the things that turn a one-day decision into a conversation, and all of them are better said by you than found by an underwriter.
- A centre under six months old, since six months of statements is the file
- Subsidy paid into an account left out of the file
- Occupancy well below licensed capacity with nothing said about why
Questions
- Does subsidy revenue count?
- Yes, exactly like parent fees. It has to be in the statements you send, which means sending every account it touches.
- Can I borrow to hire before the children arrive?
- Yes, and it is a common reason to apply. Say how many staff and for how many months — an underwriter can price that.
- We are a not-for-profit. Are we eligible?
- We fund incorporated businesses. If the entity is incorporated and has six months of statements, it is worth sending.
- Can you fund a playground or a build-out?
- Yes. A fixed cost on a fixed timeline is usually a term loan; send the quote with the application.