What Lenders Actually Funded to Open a Day Care #
Across the federal fiscal years 2024 to the third quarter of 2026, lenders approved 650 SBA 7(a) loans whose stated purpose was to open a child day care business. The median loan was $500,000, by our calculation from the SBA's loan-level disclosure.
That is a different kind of answer from the cost estimates this question usually attracts. It is not a guess at what equipment and a lease might come to; it is the amount a lender actually advanced, against a business plan it had reviewed, for a specific opening.
The Distribution Is Two Different Businesses #
The median hides the shape of the data, and the shape is the useful part. The middle half of those loans ran from $200,000 to roughly $1.18M, a range too wide to describe one kind of opening.
| Loan size | Startup loans | What this typically funds |
|---|---|---|
| Under $150,000 | 117 | A home-based or small leased operation, fit-out and working capital |
| $150,000 to $500,000 | 196 | A leased center, with fit-out, playground and licensing costs |
| $500,000 to $1,000,000 | 145 | A larger leased center, or a smaller one with property |
| $1,000,000 and over | 192 | Purpose-built or purchased premises, where real estate dominates |
More loans sit in the top band than in the bottom one, and the mean is roughly twice the median. That is the signature of two populations in one dataset: openings where the founder leases space, and openings where the loan is buying or building a property.
Deciding which one you are is the first step in using any of these figures. A founder planning a home-based opening and a founder planning a purpose-built center are not reading the same number, and an average across both is a number neither of them should use.
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What a Loan Size Is Not #
Three things sit outside these figures, and each one moves the real cost of opening upward rather than down.
The founder's own money. A loan is what was borrowed. Whatever the founder contributed in cash or equity is not in the figure, so the total cost of these openings was higher than the amounts shown.
Costs met without borrowing. Pre-opening wages, licensing fees paid from savings, equipment bought outright: none of it appears unless it was financed.
Anything a lender would not lend against. Lending decisions follow collateral and projected cash flow, not a founder's budget. Two openings with identical costs can produce very different loan sizes if one involves property a bank can take security over and the other does not.
What Counts as a Child Day Care Business #
Child Day Care Services (NAICS 624410) comprises establishments primarily engaged in providing day care of infants or children. Census notes that these establishments generally care for preschool children, but may care for older children when they are not in school, and may also offer pre-kindergarten or kindergarten educational programs.
The industry is wider than the phrase suggests. Census names nursery schools, preschool centers, child and infant day care centers, and child day care babysitting services inside the same classification. A preschool with an education program and a home-based minding service are in one industry, which is why the loan figures above span such different scales.
The boundary is drawn by what the establishment primarily does. Where a provider's main business is broader social assistance to children and families, counselling or case management rather than day care, Census classifies it in individual and family services instead.
That matters for anyone comparing these figures against a licensing category. State licensing distinguishes family child care homes from centers by capacity and premises; the federal classification does not, and holds both.
The Economics You Are Borrowing Into #
The federal record describes the business the loan is buying into. Census counts 82,162 child day care establishments with paid employees, employing 1,045,052 people (Census CBP, 2023). The average center books $729,249 of annual revenue, and the average annual wage across the industry is $29,695, our calculation from Census payroll and employment for that year.
Those two figures together explain why this industry is hard rather than merely competitive. Revenue per center is modest, the service is delivered almost entirely by people, and the ratio of staff to children is set by state licensing rather than by the operator. Labor is both the dominant cost and the least compressible one.
It also explains the loan sizes. A business with this revenue profile supports a certain amount of debt and no more, which is the constraint behind the lower two bands. Our page on day care profit margins covers what is left after those costs.
| Benchmark | On this page | In the report |
|---|---|---|
| SBA startup loan sizes and their distribution | Yes | No |
| Centers, employment, revenue per center and average wage | Yes | Yes |
| Industry receipts and five-year employment forecast | No | Yes |
| State breakdowns and market concentration | No | Not in the Basic report |
Get the report: Child day care services →