Best Daycare Business Loans of 2022

Becky Hanson

Daycare business loans can provide the capital you need to start or grow your business without having to drain your personal savings. We’ve evaluated the best daycare business loans based on loan terms, fees, rates, customer satisfaction, and overall quality.

No prepayment and origination fees


Max. Loan Amount

12+ months

Time In Business


Monthly Revenue


Min. Credit Score


If you require cash quickly due to a cash flow shortfall or have a less than perfect credit score, Kabbage could be a promising option.

What we like

  • Borrowers with fair credit can apply
  • No prepayment penalties
  • Streamlined application journey
  • No origination fees

What we don't

  • Late payment fees are applicable
  • Short repayment terms
  • Business assets required

Business loans tailored to your needs


Max. Loan Amount

6+ months

Time In Business


Monthly Revenue


Min. Credit Score


National Funding offers small businesses working capital and equipment financing loans that are suitable for a broad range of businesses, and you could receive approval and funding within 24 hours.

What we like

  • Early payoff discounts
  • Fast approval and funding
  • High approval rates for loan applications
  • Personalized experience

What we don't

  • Daily or weekly repayment
  • High minimum annual revenue

What is a daycare business loan?

Daycare business loans are designed for people starting or running a daycare business.

These loans can provide working capital to purchase equipment, renovate your facility or even buy inventory for resale. You might use that money to purchase supplies and start-up items needed during your first few months in business.

Daycare loans can range from six months to five years. The terms vary depending on your needs, but you will have to repay the loan over time regardless of when it was issued. Most lenders will require you to make monthly payments until the balance is paid off completely.

What are the requirements for daycare business loans?

Here are some of the requirements for daycare business loans which can vary by lender:

  • Credit score: The lender will want to see that you have a strong credit history, so it’s best if your score is above 500. If yours isn’t there yet, it doesn’t mean you can’t get approved, but you may have to pay higher interest rates or give up some collateral.
  • Time in business: Some lenders will also want to see that you have a track record of success in the daycare industry. This can be a balance sheet or income statement showing profit earned in the previous six months and tax returns showing income earned during those six months.
  • Annual revenue: This is the minimum amount required by most lenders before they’ll consider making a small-business loan to a daycare operator.

Types of daycare business loans

There are various options available to help you get your business up and running. Here are some other types of daycare business loans:

  • Equipment financing: If you need equipment to run your daycare business, such as cribs and strollers, an equipment financing loan can help. The lender will provide you with the money required to purchase the equipment. You’ll then pay interest on the loan and monthly lease payments.
  • Merchant cash advances (MCA): A MCA is a short-term loan that allows businesses to access cash immediately through a credit line with their existing merchant processor. Usually, the amount is based on your future sales.
  • Business line of credit: This is a line of credit that you can draw on as needed. You will not be required to make monthly payments on the loan, but you will be required to pay interest on any borrowed money. If you don’t pay the monthly amount, you will incur interest on interest. This loan is typically used to cover operating expenses, such as payroll and inventory costs.
  • SBA loan: The U.S. Small Business Administration offers several types of loans designed specifically for small businesses, including those increasing or looking for additional capital to buy equipment or expand their operations into other markets. For example, suppose you want to purchase more real estate for your daycare center and increase the number of children under your care. In that case, an SBA 7(a) loan could help with the down payment and closing costs on the property purchase and renovation costs associated with building new facilities.

What are the benefits of getting a daycare business loan?

There are many benefits of getting a daycare loan. These include:

  • Tax benefits: If you are running a licensed and certified daycare, you can earn tax benefits from your state and federal governments. The amount of tax deduction depends on how much money is spent on interest, equipment, labor costs, and other expenses related to running the daycare center.
  • Easy application process: Daycare business loans have an easy application process and approval process. You do not have to jump through hoops or fill out complicated forms to get approved for a loan.
  • Build credit history: If you don’t have much credit history or have had trouble with past payment obligations, getting a small business loan may help build your credit, so other lenders will want to lend to you in the future.

How can you use a daycare loan to grow your business?

Here are some ways your business can benefit from this type of financing:

  • Expand child care facilities: Many daycare centers start as one-room apartments or homes for families who need a place to keep their kids while working. As the business grows, you may need more playroom space, kitchenette, or outdoor play area.
  • Purchase daycare center: Daycare centers and preschools can be expensive to open and maintain. One of the most significant expenses for daycares is securing a space for children to learn and play.
  • Staffing costs: Child care facilities typically hire teachers with experience working with young children, but this can make hiring difficult for small businesses that don’t have much cash. Suppose you’re looking to expand your child care center. In that case, you may need additional staff members to provide quality care for clients — but finding staff who are qualified and willing to work long hours can be challenging without offering competitive wages or benefits packages.

How to choose the best daycare business loans

Here are some factors to consider to choose a daycare business loan:

  • Repayment plan: The repayment plan for your loan is very important because it dictates how much you will have to pay each month and how long it will take to pay off the entire loan amount. The repayment plan options vary with each lender and may include fixed payments over a set amount of time or adjustable payments based on your earnings. 
  • Application process: The application process should be easy and convenient. Many providers use an online application form that’s simple to fill out.
  • Interest rates and fees: The most crucial factor to look at is interest rates and fees. Check the APR (annual percentage rate), which includes all interest charges for late payments or other penalties. If you have bad credit, you may not be able to qualify for loans with lower rates, but if you have good credit, some providers offer very low APR rates.
  • Customer support: When choosing a daycare loan provider, it’s best to choose one with a good reputation in terms of customer service and support. You want someone who will answer your questions quickly and clearly.