Child Care Center Feasibility Study in Indiana

A light presence with heavy cancellations

Child care is a small slice of Indiana's SBA lending. The location quotient of 0.55x shows centers taking well under their national share of the state's approvals, and Indiana ranks 24 of 53 for the class, with 112 approvals worth $108.6 million over FY2017 to FY2026. Inside the state the class still places 10 of 39 by count. The median approval of $510,750 is 1.13x the national child care median, slightly larger, and no metric passes our distinctness screen against both Indiana's all-class figures and centers nationally. The figure a borrower should notice is the cancellation floor, which runs above the class nationally even though the screen does not single it out.

504 buildings and franchise brands

SBA 7(a) carried 84 loans and SBA 504 carried 28, with Indiana Statewide Certified Development Corporation holding 17 of the 504 loans, worth $22.7 million, which marks much of the 504 activity as centers buying or building their own premises. On the 7(a) side the holdings are thin: The Huntington National Bank has 9, Regions Bank 6 worth $9.9 million, and Old National Bank 5. The middle half of approvals runs from $146,375 to $1.3 million. Franchised concepts account for 34.8% of loans, a large share that brings brand standards and royalty costs into the underwriting. Hamilton County leads with 27 approvals, Marion County has 23 and Lake County 17. Activity rose late in the period, to 22 loans worth $20.6 million in FY2025 and 17 in FY2026.

Cancellation is the risk to plan for

At least 19.2% of Indiana center approvals from the FY2017 to FY2024 cohort were cancelled, and the ceiling, treating undisbursed loans as cancelled, is 21.9%. Losses on funded loans have been modest: of the 31 loans in the FY2017 to FY2021 disbursement group, the charge-off floor is 3.2% and the five-year measure reads 0.00%; a group this small can move on a single default.

For a sponsor, a cancellation floor of 19.2% argues for settling the hard questions before the commitment letter. A feasibility study for an Indiana child care center should count Indiana children by age band inside the commute parents will make, along with waitlists and the licensed seats already competing for them, and should test tuition against what local families and any subsidy program will actually pay. Cost has to cover building or conversion to licensing standards, playground and safety requirements, and a staffing plan that meets required ratios at market wages. Show debt service coverage month by month as enrollment builds, rather than assuming a full roster when the doors open. The appraisal of a purpose-built center turns on its income and on how readily it could be reused, and the study's figures should support both.

One limit runs through these numbers: family child care homes share the code with centers and cannot be separated from them, so in-home providers are inside the Indiana count.