Childcare expansion
Added capacity pays only after children enroll, but construction and teachers are paid first. Here is how to cost the buildout, the staff your ratios require, and the enrollment ramp, then size funding to all three.
✓ Checking what you qualify for does not affect your credit score.
Updated October 13, 2026 · Merchant Fund Express
An approved increase in licensed capacity has three costs: the buildout, the staff your ratios require before the first new child arrives, and the ramp, the months when new rooms are staffed but not full. Most owners fund the first and forget the other two. Size the request to all three, minus the cash you can put in.
Wait if the license amendment, zoning, or fire and health inspections are still pending. Funding a buildout you may not be allowed to fill is the costliest mistake in this industry. Non-profit centers are not eligible; for-profit centers, including sole proprietors, are.
Take a for-profit center licensed for 96 children with 88 enrolled at an average of $1,300 a month, about $114,400 a month in deposits. Its state approved an amendment to 128 seats once two classrooms are added. The example assumes ratios of 1 to 6 for toddlers and 1 to 10 for preschool; use your own state’s numbers.
| Item | Cost |
|---|---|
| Two classrooms, finishes and inspection | $96,000 |
| Playground extension and fencing | $28,000 |
| Furniture, cots, supplies | $18,000 |
| Buildout total | $142,000 |
| Staff: 12 toddlers at 1:6 = 2, 20 preschoolers at 1:10 = 2, plus a floater | 5 teachers at $3,500 a month = $17,500 |
All figures in worked examples are illustrations of the arithmetic, not offers or quotes. Real terms depend on your file and the funder.
New seats rarely fill on opening day. Assume 8 new children a month from a February 1, 2027 opening, teachers hired in January for training, $120 a month per child in food and supplies, and $1,500 a month in added utilities.
| Month | New children | New tuition | New costs | Net |
|---|---|---|---|---|
| Jan 2027 | 0 | $0 | $19,000 | −$19,000 |
| Feb | 8 | $10,400 | $19,960 | −$9,560 |
| Mar | 16 | $20,800 | $20,920 | −$120 |
| Apr | 24 | $31,200 | $21,880 | +$9,320 |
| May | 32 | $41,600 | $22,840 | +$18,760 |
The ramp loses $28,680 before it turns. Adding that to the $142,000 buildout and subtracting $50,000 of owner cash gives a funding need of about $120,700. One lever: hire the floater and the second preschool teacher only when enrollment requires them, which can cut the ramp loss by several thousand dollars.
All figures in worked examples are illustrations of the arithmetic, not offers or quotes. Real terms depend on your file and the funder.
The owner requests $120,000 of revenue-based funding, funded Monday, November 2, 2026. Assume an illustrative factor of 1.30 and a $3,600 fee: net proceeds $116,400, total repayment $156,000, in 52 weekly payments of $3,000 from Friday, November 6, 2026 through Friday, October 29, 2027.
The test that matters: from November to March, the existing 88 children carry the entire payment while the new rooms are built and fill. If your current center does not clear the payment with room to spare, take a smaller amount, phase the classrooms, or wait until the first room is open. Run your own numbers in the payment burden calculator.
All figures in worked examples are illustrations of the arithmetic, not offers or quotes. Real terms depend on your file and the funder.
For related moves, see daycare expansion funding, a second location, remodel or relocate and hiring and training.
Fill in the buildout, staffing and ramp tables with your quotes, ratios and waitlist. If the total after your own cash is $25,000 or more and your current center carries the payment, apply with your statements and license approval. The application takes about five minutes and starts with a soft credit pull.
You can apply, but we suggest waiting. A buildout that cannot be filled until a pending approval comes through puts the payment on your current enrollment for longer than planned.
They set how many teachers you pay before new children enroll. In the example, 5 teachers cost $17,500 a month, and the January hiring month alone cost $19,000 with utilities.
When they are paid into your business account, they show as deposits. Point the reviewer to them so they are read as recurring income.
No. Non-profits are not eligible. For-profit centers, including sole proprietors, can apply.
Usually, when the file qualifies. A buildout pays back over years, and a term loan spreads the cost. An advance fits newer centers, at a higher price and a shorter payback.
Same-day decision. Applying takes a few minutes and will not affect your credit score.
