The best loan for a daycare depends on what the money is for. For fast capital (payroll while you wait on family or state subsidy payments, repairs an inspection calls for, supplies), Merchant Fund Express is our recommended funder: it reviews sales and deposits, works with credit from FICO 500 and often decides in 2 to 4 hours. To buy or renovate your building, an SBA loan usually costs less, and the SBA microloan program even covers certain nonprofit child care centers.
A daycare has a very specific cash flow: weekly or monthly tuition, state subsidy payments that sometimes arrive late, strict staff-to-child ratios, and big expenses when licensing or an inspector requires changes. This list is built for that business, whether you run a center with classrooms or a licensed home daycare.
Key takeaways
- Our recommended funder covers fast cash flow needs, from FICO 500, with decisions often in 2 to 4 hours.
- The SBA microloan program lends up to $50,000 and includes certain nonprofit child care centers.
- To buy or renovate your facility, an SBA 7(a) usually costs less if every owner is a U.S. citizen or national.
- Keep your state license, latest inspection report and enrollment roster ready.
- Plan for the extra payroll that staff-to-child ratios require before you expand.
How we chose
How we rank: we don't give ratings or invented scores. We compare every option on the same criteria: decision speed, minimum time in business, minimum credit, ITIN acceptance or owners without an SSN, documents required, amounts and whether collateral is required. We include only details each company publishes on its official site (checked October 20, 2026); anything we couldn't confirm, we left out. For daycares we gave extra weight to two things: whether the option fits licensing and facility costs, and whether it works with a tuition-based cash flow. Read the full method in how we rank business funding options.
The best business loans for daycares, ranked
Merchant Fund Express (recommended funder). When the state is late paying its share of tuition, or the inspector gives you 30 days to replace the playground surface, you can't wait weeks. Here approval is based on sales and deposits, not just credit; it works with profiles from FICO 500, offers $5,000 to $5,000,000, and in most cases doesn't require collateral. Applying is free with no impact to your credit, it accepts applicants with an ITIN (no SSN needed) and it offers Spanish-speaking support. Apply here.
SBA microloan. According to the SBA, this program lends up to $50,000 to help small businesses and certain not-for-profit child care centers start and grow. Loans are made by nonprofit community organizations, with a maximum term of 7 years. They can be used for working capital, inventory, furniture and equipment, but not to pay existing debts or buy real estate.
SBA 7(a) loan through a bank. Up to $5 million to buy, refinance or improve real estate, or for working capital or equipment. It's usually the cheapest option if you qualify, but it's slow and paperwork-heavy. Since March 1, 2026, 100% of owners must be U.S. citizens or nationals whose principal residence is in the U.S.
Accion Opportunity Fund. A mission-driven lender that publishes loans of up to $250,000. It can be a middle ground between the speed of an online funder and the cost of a bank.
OnDeck. Its term loan runs from $5,000 to $400,000 with terms up to 24 months, and it requires 1 year in business, $100,000 in annual revenue and a 625 FICO. It fits established daycares that want to open one more classroom.
National Funding (equipment). Finances new or used equipment up to $150,000, with monthly payments over 2 to 5 years. Useful for a passenger van, a commercial kitchen or furniture.
Comparison table
| Option | Best daycare use | Credit | Minimum time | Amounts |
|---|---|---|---|---|
| Merchant Fund Express | Payroll, repairs, cash flow | FICO 500+ | Based on sales and deposits | $5,000 to $5,000,000 |
| SBA microloan | Startup, furniture, supplies | Set by the organization | Can fund a startup | Up to $50,000 |
| SBA 7(a) | Buying or renovating your facility | Set by the bank | Set by the bank | Up to $5 million |
| Accion Opportunity Fund | Growth at moderate cost | Not published | Not published | Up to $250,000 |
| OnDeck | Another classroom, upgrades | 625 | 1 year | $5,000 to $400,000 |
| National Funding (equipment) | Van, kitchen, furniture | Most 600+ | Not published | Up to $150,000 |
What daycares usually need money for
These are the most common reasons a daycare looks for financing, and which type of option fits each one:
- Late state payments. If you serve families who receive state child care assistance, part of your income depends on the state paying on time. Short-term working capital covers payroll until the payment arrives. A line of credit is even better if it happens often; see the best lines of credit for childcare providers.
- Licensing or inspection requirements. Fencing, playground safety surfacing, alarms, accessible bathrooms. These costs don't wait. Fast financing or a microloan can work, depending on the deadline you're given.
- Adding capacity. More classrooms mean more teachers, and staff-to-child ratios push payroll up before tuition catches up. Plan cash flow for the first few months.
- Enrollment season. Many daycares fill spots in August and September and have gaps in summer. Borrow with those months in mind.
- Buying the building. Here a long-term SBA or bank loan is almost always the better fit, if you qualify.
Home daycare vs. child care center: what changes
Financing a center with classrooms and ten employees isn't the same as financing a licensed family daycare in your home. Here's what changes:
| Topic | Home daycare | Child care center |
|---|---|---|
| Typical amounts | Small: supplies, fencing, playground equipment | Medium to large: classrooms, kitchen, transportation, facility |
| Proof of income | Tuition deposits in a separate account | Bank statements, payroll and financial statements |
| Collateral | Rarely a business asset to offer | The building or equipment may serve as backing |
| Best route | Microloan, small deposit-based financing | SBA or bank for the building; working capital for cash flow |
In both cases, the same things help most: a current license, full enrollment and tuition flowing steadily into a business account. If your home daycare collects some tuition in cash, deposit it; otherwise, to a funder that income doesn't exist. And if you're thinking of moving from your home to a center, do it in stages: lock in the license for the new space and a waitlist first, then the financing. Borrowing before the new space is licensed is a risk many owners regret, because rent starts running while you wait on the inspection.
Documents you'll be asked for
A daycare has its own paperwork that a funder may request. Have it ready:
- Current state child care license and your most recent inspection report.
- Business bank statements for the last 3 to 6 months, showing tuition and state payment deposits.
- Enrollment roster and licensed capacity, to show full spots or a waitlist.
- Lease or deed for the facility.
- Current liability insurance.
- Tax returns, especially for SBA or bank loans.
If you run a home daycare, keep finances clearly separate: a business account used only for tuition and daycare expenses makes your sales easy to read. For more financing routes in this industry, see business loans for daycares. Prefer Spanish? Leer en español.
Mistakes to avoid
- Funding an expansion without confirmed enrollment. Before opening another classroom, have a waitlist or pre-enrollments.
- Ignoring staffing ratios. Each group of children needs a set number of teachers under your state's rules. If you grow without counting that payroll, the loan becomes a burden.
- Using expensive money to buy the building. Short-term financing is for cash flow and urgent costs, not real estate.
- Stacking one advance on top of another. If you're already behind on one, lower the existing payment and stabilize before you borrow more.
- Not reading how payments are collected. Tuition comes in weekly or monthly; a daily debit may not line up with your cash flow. Ask whether weekly payments are available.
Frequently asked questions
Can I get a loan to open a daycare?
Yes, but there are fewer options for opening than for growing. An SBA microloan, up to $50,000, can be used to start a business. Funders that review deposits, like Merchant Fund Express, need to see sales, so they fit better once you have children enrolled.
Can I get a business loan for a home daycare?
Yes, if you're licensed and your income shows up in a business account. A home daycare with tuition deposited every week can qualify with funders that review sales and deposits. Keep personal and business accounts separate so your full sales are visible.
What should I do if the state is late on my subsidy payments?
First, confirm the expected payment date with the state agency. If you need to cover payroll in the meantime, short-term working capital or a line of credit can bridge the gap. Borrow only what you need to cover that gap.
What's the cheapest loan to buy my daycare building?
Generally, an SBA 7(a) loan or a long-term bank loan. The 7(a) can go up to $5 million, but it's slow and paperwork-heavy. Since March 2026, every owner must be a U.S. citizen or national to qualify.
Do I need collateral for a daycare loan?
It depends. SBA and bank loans usually take collateral when it exists, such as the building. Many online funders don't require a specific asset, though they do ask for a personal guarantee. With our recommended funder, most cases don't require collateral.