Daycare and Child Care Merchant Cash Advance & Business Funding
Merchant cash advance for daycares and child care centers.
Daycares and child care centers can get a merchant cash advance when tuition and subsidy deposits are steady. Funders look at how much comes from parents versus state subsidy programs, because subsidy money arrives on the state's schedule, not yours. Summer can dip when school-age children leave, so size any payment on the leaner months.
How do funders read daycares and child care centers?
Funders like enrollment that's steady month to month and a waitlist if you have one. They look at the gap between when you pay staff and when subsidy money arrives. A center that depends on one subsidy program for most of its revenue gets asked more questions than one with a mix of private-pay families.
How does money come in for daycares and child care centers?
Most centers collect tuition weekly or monthly by ACH autopay or card. Many also take state child care subsidy payments, which arrive by direct deposit on a schedule the state sets, often after the care is given. Funders count both as deposits, but they'll ask what share is subsidy and how late it usually lands.
Which months are slowest for daycares and child care centers?
This table shows how many people private child care services (NAICS 624410) businesses employed each month, as an index where the year's average is 100. It comes from the Bureau of Labor Statistics Quarterly Census of Employment and Wages, the most recent full year available. Staffing is a stand-in for how busy a business is. Deposits can move more or less than headcount, so read it as the shape of the year, not your numbers.
| Month | Staffing index (average = 100) | |
|---|---|---|
| January | 100 | |
| February | 100 | |
| March | 101 | |
| April | 101 | |
| May | 102 | highest |
| June | 101 | |
| July | 97 | lowest |
| August | 99 | |
| September | 99 | |
| October | 100 | |
| November | 100 | |
| December | 100 |
The low point is July at 97.5 and the high point is May at 102.5, a swing of 5 points. For child care the summer dip is shallow in this data, but individual centers that serve school-age children can see much more.
| Quarter | Total payroll index (average = 100) |
|---|---|
| Quarter 1 | 96 |
| Quarter 2 | 101 |
| Quarter 3 | 99 |
| Quarter 4 | 104 |
Payroll by quarter can rise at year end for reasons like bonuses and overtime, not only more work.
What do daycares and child care centers use merchant cash advances for?
- Staff wages while waiting on subsidy payments.
- Repairs or upgrades a licensing inspection calls for.
- Playground equipment, furniture and classroom supplies.
- A van for pick-ups and field trips.
- Opening a second classroom.
What does an advance payment look like in a slow month?
Staffing barely moves through the year here, so the slow month to plan for isn't seasonal. None Say a business like yours deposits $80,000 in an average month and carries a fixed payment of $8,000 a month, 10% of that average:
| Deposits | Fixed payment | Share of deposits | |
|---|---|---|---|
| Average month | $80,000 | $8,000 | 10.0% |
| A month 20% below average | $64,000 | $8,000 | 12.5% |
A fifth less in deposits turns a 10% payment into 12.5%. Keep a cushion for it, or ask how reconciliation works before you need it.
Which funding options fit daycares and child care centers?
Each page runs one option against this industry's slow months.
Same-day merchant cash advance for daycares and child care centers
Money the same business day for an urgent cost, with the fixed daily debit measured against a slow month.
Business line of credit for daycares and child care centers
A draw sized for a slow month, repaid in thirds, with the interest on the balance worked out.
Revenue-based financing for daycares and child care centers
A remittance that moves with revenue, so a slow month sends less, and the months to reach the repayment cap.
MCA consolidation for daycares and child care centers
One payment in place of two, with the share of deposits before and after in a slow month.
Second position MCA for daycares and child care centers
What a second advance adds on top of the first, and what both payments take from deposits in a slow month.
Run a business like this?
Tell us your slow months up front and we'll look for funders that size for them. Call 877-FUND-654 with any question. We call you back, usually the same business day, and we always talk with you before we shop your file.