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.
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.
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.
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.
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.
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.
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.