Can a home daycare get a business loan?

The short answer

Yes. Naptime Capital approves licensed home-based and family child care providers for working capital, and for a line of credit or term loan when the provider meets those products’ credit and deposit floors. Most lenders decline a home provider on the business type alone, before reading a single statement, because the address is residential and the deposit base is smaller than a center’s. We read the statements. A home that runs $15,000 a month through a business bank account and has been operating for 6 months is a fundable file, whatever the owner’s credit score looks like.

What a home provider has to show

The requirements are identical to a center’s. The differences are in how a home provider usually arrives at them.

Notice what is not on the list: collateral, a business plan, a minimum enrollment count, a commercial lease, or tax returns under $500,000. A home provider is not asked to prove anything a center is not asked to prove.

Why the business account is the whole conversation

The single most common reason a home provider is not fundable today is that tuition and subsidy payments are deposited into a personal checking account, sometimes the same account that pays the mortgage. Underwriting reads business bank statements. A personal statement with child care deposits mixed into household money cannot be sized, because the underwriter cannot separate the program’s revenue from the family’s, and cannot tell whether the balance pattern belongs to the business.

The fix is mechanical, not financial. Open a business account under the licensed entity or your registered business name, redirect every tuition draft, subsidy reimbursement, voucher payment and food-program reimbursement into it, and run three full months through it. On month four you have a file. A provider who has been operating for years but opened the business account 90 days ago counts the years toward time in business and the 90 days toward statements.

What the underwriter reads on a home-based file

1. Deposits, by source. Private tuition, state subsidy reimbursements, voucher payments and food-program reimbursements all count in full. A home that is mostly subsidy-funded is read the same way as a private-pay program.
2. Average daily balance. Smaller deposit bases swing harder between agency cycles. A home that stays above zero in the week before the reimbursement posts is a stronger file than one with bigger deposits that touches zero every month.
3. The slowest month. The payment is sized against your floor month in the statement window, not the average. A home that closes for two weeks in summer should send four months of statements, not three, so the dip and the recovery are both visible.
4. Returned items. A couple of NSFs clustered before a late reimbursement is a timing story. A steady pattern is a decline on any product.
5. Existing advances. Disclose them. An undisclosed open advance is found at funding and ends the file; a disclosed one is a structure conversation, often a consolidation.

What home providers use the money for

The requests look like a center’s at a smaller scale: a second provider or assistant so the license can move to a higher capacity, the fenced play area or safety changes an inspector required before the next license renewal, a vehicle for pickups, and payroll in the weeks a subsidy reimbursement runs late. Working capital terms run 3 to 18 months, so a capacity upgrade that adds enrolled children can be matched to a term that ends about when the new tuition has paid for it. The representative file on this site, $150,000 over 12 months with a $756 daily payment, is far larger than most home requests; the range starts at $10,000, and the mechanics are identical at any size.

What you’ll need

• A business bank account under the licensed business, with 3 full months of deposits (4 if you close seasonally)
• At least $15,000 a month in deposits into that account — tuition, subsidy, voucher and food-program reimbursements all count
• 6 months operating as a licensed provider (time in business counts from when you started, not when you opened the account)
• Your child care license or registration in the business or owner name
• A list of any open advances or business loans, with balances
• The 4-minute application — no business plan, no collateral, no tax returns under $500,000

If you are just under the floor

A home at $12,000 or $13,000 a month in deposits is not a decline, it is a timing question. Call (888) 896-5559 and the desk will tell you exactly which month would clear the floor based on your statements, and whether moving a food-program reimbursement or a late tuition family into the business account gets you there. The home-based child care page lists the rest of what we see on these files, and the bad credit guide covers the credit side if that is also a concern.

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Related: Working capital · Home-based & family child care · Covering payroll when subsidy payments are late · What you need to apply.