Child Care Center Feasibility Study in Arizona

A Maricopa County story

Arizona's child care record is concentrated in one place: 104 of the 138 approvals from FY2017 to FY2026 are in Maricopa County, with Pima at 15 and Pinal at 7. Statewide the cell totals $99.2 million and ranks 20 of 53, child care places 11 of 39 among Arizona classes, and a location quotient of 0.67x shows centers taking a smaller share of Arizona SBA lending than they take nationally. The median loan of $481,350 is 1.06x the national median for centers, close to par. Neither size nor outcomes sit far enough from both Arizona's record across classes and centers nationwide to be singled out, so the cell's interest lies in where the loans go and how they have performed.

A clean loss record, a cancellation risk

Not one of the 64 Arizona center loans funded from FY2017 through FY2021 has been charged off, leaving both the to-date floor and the five-year rate at 0.00%. Cancellation is the hazard instead, with a floor of 12.0% for Arizona approvals over FY2017 to FY2024, lifting to 13.9% when loans still waiting to fund are counted as cancelled. For a borrower the danger is less a failed center than a deal that never closes, which argues for settling licensing, zoning and the construction budget before approval.

Programs and lenders

Arizona's middle half of loans runs from $251,000 to $958,075. Of the Arizona approvals, 116 came under SBA 7(a) and 22 under SBA 504. Arizona Capital Source holds loans under both programs: 10 under 504 worth $7.3 million and 6 under 7(a) worth $843,400, while 7 loans from The Mortgage Capital Development Corporation add $10.3 million. Wells Fargo Bank National Association has 8 guaranteed loans, Enterprise Bank & Trust 6, and Live Oak Banking Company and BMO Bank National Association 5 each. Franchise brands account for 17.4% of loans. FY2025 was the strongest recent year, with 19 loans and $17.3 million.

An Arizona child care feasibility study has to measure enrolment demand for infant, toddler and preschool places within a realistic commute of the site, set against the working families and competing centers in that radius. It must cost the build or conversion to licensing standard against a loan near $481,350 and show debt service coverage on an honest enrolment ramp, since a new center fills slowly. The appraiser has to value the Arizona building as real estate in its own right, which matters if an operator fails, even though no Arizona loan in the measured cohort has.

The Arizona counts include in-home providers, because family child care homes carry the center code and cannot be separated.