Child Care Center Feasibility Study in Alabama

The cancellation measure sets Alabama apart

Alabama child care stands out for how many approvals fail to fund. The cell holds 53 SBA loans from FY2017 to FY2026, worth $43.7 million. A quarter of approvals through FY2024 were cancelled at minimum, with a floor of 25.0%, and the ceiling, which counts every loan still undisbursed, rises to 27.5%. Cancellation is the metric on which this cell departs from both Alabama lending overall and child care nationally, and a lender should read it as a warning about deals that stall between approval and closing. Loss history is unreported for Alabama: the early funded cohort is too thin.

Size, share and program mix

The median of $344,000 is 0.76x of what child care borrows nationally at the middle, and half of the loans range from $195,400 to $850,000. The state ranks 38 of 53 for child care, child care is 9 of 39 among Alabama asset classes, and a location quotient of 0.73x shows the sector at under its national weight. The 7(a) program carried 37 loans and 504 carried 16. Franchises are 24.5% of loans, a high share that brings franchisor rules, fees and standards into the borrower profile.

Lender and map

Florida Business Development Corporation holds 8 of the 504 loans and $5.9 million, a development company that is the only name on the listing, so 7(a) lending is spread across many banks. Jefferson County has 11 loans, Shelby 9, Madison 7 and Mobile 6. Volume has been uneven: FY2018 had 7 loans and $7.4 million, FY2020 only 2 loans and $929,000, and FY2026 returned to 7 loans and $7.5 million.

Making an Alabama centre bankable

Given how many approvals fall away, the study should address the usual reasons. Enrolment demand comes first: children of the right ages near the site, competing centres, and the rate parents will pay. Licensing is the next hurdle, as capacity, staffing ratios, outdoor space and building codes can change the budget for a conversion or a build. A franchised project needs the franchisor's cost and revenue assumptions tested against local reality, including royalties. Payroll is the largest expense, so teacher wages and turnover should be explicit. Show coverage while rooms fill slowly, and add a downside case. The appraisal will treat the building as special purpose, so equity and a reserve for the opening months protect the lender.

A coding limit

This code lumps in-home family care together with centres, so some smaller operators sit in the cell.