Child Care Center Feasibility Study in the Detroit-Warren-Dearborn, MI Metro Area

Child care in metro Detroit

SBA files show 137 child care center loans in the Detroit area for FY2017 to FY2026, $91.0 million gross, 19 of 493 nationally and 8 of 39 locally. A location quotient of 0.79x puts the class under the national share, and the median of $338,500 is only 0.75x the national median. Quartiles: $100,400 and $700,000. Oakland County has 60 loans, Wayne County 54 and Macomb County 18.

Franchise flags attach to 19.7% of loans. Of the 137 loans, 120 are 7(a) and 17 are 504. The class code is shared and also holds in-home child care, so the low end of the range may include home-based providers. A study for a licensed centre should therefore compare itself with the upper half of the range and not the median alone.

The one prominent holder

The Huntington National Bank is the one prominent holder, with 33 loans at $13.4 million. Beside it stand Bank of America, National Association (5 loans, $3.4 million) and Northeast Bank (ME) (5 loans, $706,600). No development company reaches the listing threshold. A bank that dominates a table dominates a count of holdings, which is not the same as dominating the market's decisions.

A contrast worth noting

Cancellation after approval has a floor of 17.5%, high for the class, with the ceiling withheld. At the other extreme the charge-off floor prints as 0.00% across a cohort of 46 disbursed loans, and the five-year figure prints 0.00% as well. Those zeros are printed values on a small cohort, which means no charge-offs have been recorded in SBA files; they are not a forecast. The pattern points to deals that fall through before funding rather than loans that fail after it.

Oakland County, with 60 loans, Wayne County, with 54, and Macomb County, with 18, set three different demand pictures: family incomes, licensed capacity and commuting patterns all differ among them, though SBA files carry none of those facts. The study must bring its own enrollment evidence for the chosen county and show how many licensed seats already stand within a short drive of the site.

A study should test licensed capacity and enrollment demand in the chosen county, staffing cost, tuition against operating cost, the cost of the building, and the coverage ratio on a $338,500 request. The 137 Detroit-area child care loans come from Oakland, Wayne and Macomb, each named in the July 2023 delineation; centres whose county the delineation omits would not be counted, which keeps 137 a lower bound.