Best Daycare Business Loans for 2022

There are many factors to consider before applying for a daycare business loan, especially as safety and security concerns are involved. On this page, our experts will guide you through the best daycare business loans to help you start your new venture or expand your existing practice.

Financially Reviewed by Thomas J. Brock

At a glance You can use a daycare business loan to cover your operating fees for the first year, and ideally, the profits you make will cover your loan payments. Industry-specific loans are a great option, as they typically provide you with a better chance at approval and lower interest rates. Some lenders cater to daycare business loans, and will also help you shape the way you manage and spend the funds. 

A Quick Overview of the Best Daycare Business Loans

Here we will outline the top daycare business loans according to financial. You’ll also find potential lenders for each loan type.

Financing Need

Best Loan Type

Loan Features 

Recommended Lender

Working capital

SBA loan

  • Amount: Up to $5 million
  • Term: Up to 25 years
  • Interest: As low as 4.75%
  • Time to get the loan: Up to 2 weeks


Expansion & operating

Short-term loan

  • Amount: Up to $250,000
  • Term: Up to 18 months
  • Interest: Varies
  • Time to get the loan: Up to 24 hours



Equipment financing

  • Term length - 1-5 Years
  • APR range - As low as 7.5%
  • Min/Max amount - $5,000-5,000,000
  • Repayments - monthly 


Finance recovery

Invoice factoring

  • Invoice factoring rates generally fall between 1-5% of each invoice sold
  • Cash can be acquired immediately
  • Advance rates vary from 10-30% of the total unpaid invoices

PayPal Working Capital


A business line of credit

  • Amount: Up to $500,000
  • Term: Typically, up to 18 months
  • Interest: Starting at 35.90%
  • Time to get the loan: Up to 24 hours


Equipment maintenance, marketing strategies, insurance, taxes, business registration, permits, rent

Merchant Cash Advance

  • Amount: Between $5,000 and $500,000
  • Term: Terms are not set in stone
  • Interest: One-time factor rate
  • Time to get the loan: Up to 24 hours

Fora Financial

The Best Daycare Business Loans Explained

Now let’s work through each of the loans featured in the table above so you can see how they apply to the daycare industry.  

1. Fundera - Best for SBA Loan

When you need a capital injection to help get things rolling, a Small Business Administration (SBA) loan is one option. Since you’ll have government support for your industry, you can expect extended loan terms. However, you’ll need to find an approved lender to make use of this finance solution.

Whether you’re buying or renovating property for your daycare business, you’ll need capital to get started. Even if you’re just adding new assets to the facility, an SBA loan will help finance the purchase and installation. You can enjoy paying lower monthly amounts while your company attracts clients, over the first few years.

When it comes to approved SBA lenders, Fundera is right there at the top. Even if you don’t get approval for this funding option, Fundera may offer you one of its other loan options. With its great customer support model, you won’t be left stranded.

2. BlueVine - Best for Short-Term Loan

A short-term loan is a good option if you don’t qualify for an SBA loan. However, a short-term loan has a lower repayment period and higher interest rates than a SBA loan. You can use a short-term loan as capital to start a small business, but many companies use it to help them expand their business. It helps if you already have a steady stream of revenue so that you can pay back the loan by the deadline.

If you’re taking over an existing location rather than developing property, you may want to make some changes to the building to accommodate your daycare center. The beauty of short-term loans is that you can also use the money from the loan to cover your operating budget. It’ll tie you over for the first year until you make enough revenue to sustain your business.

BlueVine offers several loan categories, but it specializes in short-term loans. It isn’t strict about credit scores and has low requirements for small business loans. You’ll also enjoy its competitive interest rates.

3. Lendio - Best for Equipment Financing

Equipment financing is the ideal solution if all you need financing for are assets and machinery to kit out the property. You’ll receive the total value of the equipment you need to operate your business, with a long repayment period. The interest rate varies based on your track record and loan amount.

You’ll want to invest in some equipment and furniture, such as cribs, playmats, safety gates, a jungle gym, educational items, and toys. This type of kit will set the tone for an enjoyable experience at your daycare center.

Lendio is a business financing platform. Lendio functions as a broker. This platform connects loan applicants with different products and lenders. We recommend Lendio for your equipment financing loan needs as they offer competitive terms and a variety of equipment loans to choose from.   

4. PayPal - Best for Invoice Factoring

Invoice factoring is beneficial when your clients owe you money from outstanding accounts, and you need quick cash resources. Lenders will purchase your invoices, and will receive the funds in return when your clients pay. Lenders will take a factor fee as a small percentage, which they will add to the account, rather than an interest fee.

Many daycare center owners will tell you how they’ve gone through bad patches, waiting for clients to settle their accounts. Since you have employees and utilities bills to pay, you often can’t afford to wait for clients to foot the bill. With invoice factoring, you can keep your practice running until the payments arrive.

PayPal Working capital is our choice lender for invoice factoring loans. PayPal offers no origination fee or early repayment fees, flexible payments with no credit check, and a speedy application process. 

5. OnDeck - Best for Business Line of Credit

A business line of credit provides you with a constant cash flow so you can cover your daily expenses. As with a revolving loan, you’ll be able to reuse the money available after you make payment. You’ll have an upper limit, which might rise if you show that you’re a reliable customer.

A daycare center needs a constant stream of daily cash. In some cases, you may need extra cash for urgent purchases or emergencies. Even if you simply want to treat the children to a day out with snacks and ice cream, it helps to have some credit to make the day go smoothly. You’ll be able to pay back the line of credit at the end of the month when your clients send their payments through.

OnDeck boasts an exceptional business line of credit option. It’ll give you a flexible payment plan, always ensuring that you have the funds when you need them.

6. Fora Financial - Best for Merchant Cash Advance

In most cases, daycare centers must have access to cash at all times. If emergency situations pop up, the company must be able to deal with them. Merchant cash advances can help keep the company’s cash flow healthy and allow investment in the center’s future, such as renovations or expansions.

Fora Financial is recommended for merchant cash advances because they have flexible payment terms and make it easy to apply. There are no strict requirements other than basic ones that prove the center can afford to repay the cash advance.

Fora Financial also doesn’t restrict how their clients use the cash advance. Daycare centers can apply for a cash advance between $5,000 and $500,000. Upon approval (which takes only 24 hours), the funds will be deposited into the company’s bank account within 72 hours.

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How Much Does it Cost to Open a Daycare Business?

If you enjoy working with children, this industry can be emotionally rewarding. It offers you the chance of financial freedom, letting you have more control over your income. 

However, the daycare business loans you need will vary according to the type of center you wish to open. You can start small with about $10,000 or go big with ample space and equipment for $50,000.  

You will need to consider whether you want to buy, lease, develop, or renovate. You also need to think about the months where you might hit a rough patch or when facility maintenance could be required. Financial solutions are available for all these scenarios.

Here’s a brief look at what costs a daycare business may incur:

  • Property development or rental
  • Payroll
  • Utilities
  • Equipment and supplies
  • Computer technology
  • Branding
  • Marketing
  • Tax or insurance
  • Permits
  • Business registration

While lump-sum loans are popular, you may also want to look into financing options for your daily operations. While you’ll need to deal with schedule and preventative maintenance, sometimes emergencies occur where you need to fork out cash instantly. Always ensure that you have funds available for these situations.

Recommended Reading: Best Medical Practice Loans and Financing

How to Choose the Best Daycare Business Loans

While most of the above daycare business loans look attractive, you will need to consider which loan suits you the most. Also, take care to view the payment terms so that you aren’t caught out without a profit at the end of the quarter. Let’s take a look at some factors for you to consider.

Firstly, you should think about what you’re going to use the funding to accomplish. Do you need to purchase property or are you taking over an existing business? How much equipment do you need to start with to get you off the ground?

Some lenders will offer you multiple solutions and you will only need to submit one proposal. If you find that multiple loans will help you save money in the long run, this may be a viable option. However, carefully read the fine print as you don’t want to get locked into a specific vendor.

Recommended Reading: Best Pharmacy Business Loans

See Our Additional Guides on Industry-Specific Loans

Bottom Line

Dealing with children can be exciting if you have a passion for this kind of business. It can also be risky if you don’t budget or plan properly. Ensure that you find the best daycare business loans that align with your business plan for a profitable future.