Daycare Sources of Funds

• Because caring for children as a business carries a large social responsibility, there are numerous sources of funding for starting this kind of small business. Good sources of initial financing are friends, family and "angel" investors. Similar to grants, these funds do not have to be repaid, like credit funds. Grant funds from institutions and the federal government are not as abundantly available as some would like us to believe. Angel investors are successful entrepreneurs who have funds to invest in other small businesses. Usually, they are local and difficult to find. Your banker, attorney or accountant are good sources for locating them.
  
  

Financing Sources for Short-Term Funds

• The National Association of Child Care Resources and Referral Agencies (NACCRRA) is an important resource for starting a daycare business. Their website provides contact information for each state agency, which can assist in finding local grants, and micro loans.
  
  Starting a daycare center requires quick and easy access to cash funds to support its working capital and liquidity needs. Business credit cards are a good source for this quick cash need and will help support starting costs. A bank line of credit will also serve cash needs, but it will require a good personal credit rating to get.
  
  

Credit Sources of Daycare Financing

• Any starting business, including daycare, will discover financing to be difficult to find. Banks consider a starting business to be too high risk for bank loans, unless their is a guarantor to ensure repayment if the small business fails. The U.S. Small Business Administration (SBA) provides bank loan guarantees for small starting businesses, and its program is described on its website. Their micro loans are especially suited for small starting daycare centers and focus on providing small loans to women, minority and veterans.
  
  

Brainstorming and Planning for a Daycare

• Before financing a startup daycare business there must be significant research regarding the size of the market, other daycare centers and their services. Financial projections for cash, income and spending monthly for a few years are required. Identify and get licenses required by government agencies, and assemble all personal and business documents that financing groups require. This and other information must be written into a business plan. The SBA provides outlines of good business plans on their website.