Child Care Center Feasibility Study in the Indianapolis-Carmel-Greenwood, IN Metro Area

Large dollars, below-parity concentration

Child care centers in the Indianapolis-Carmel-Greenwood area carry a bigger ticket than most service classes. SBA approved 65 loans between FY2017 and FY2026 totalling $80.0 million, and the midpoint of $616,000 is 1.36x the class's national midpoint. Typical loans span a wide range, from $150,000 to $2.0 million, which covers leased classroom conversions on one end and owned, purpose-built centers on the other. Even so the location quotient of 0.68x tells us child care is a thinner slice of Indianapolis lending than of lending nationally.

Ranks in two directions

The area is 36 of 493 metro and micro areas for the class, and within the area child care is 7 of 39 asset classes. A reader might expect a mid-sized metro to rank higher, but the quotient explains why: the area's lending is spread across many other classes. The program split is 50 under 7(a) and 15 under 504, and franchise concepts account for 49.2% of loans, a share high enough that a franchise agreement is a real option in this class, not an exception.

Hamilton and Marion counties

Hamilton County leads with 27 loans, ahead of Marion County, which holds Indianapolis itself, with 23, and Boone County with 5. That puts the suburban north ahead of the central city, which fits where family growth and newer sites have tended to be. The code shared by centers also holds in-home child care, and SBA cannot separate the two, so some loans may be to home-based providers.

The named holders

The Huntington National Bank is listed on 8 loans worth $3.5 million, and Regions Bank on 6 loans worth $9.9 million, a far higher average. The latter point suggests larger centers sit with Regions in this record, though this is only what SBA's holder field shows. A lender's presence here says nothing about its terms, and a borrower should not read a name as a program.

What the years and floors leave out

Annual figures printed are FY2021 with 6 loans and $7.8 million, FY2023 with 11 and $11.5 million, FY2025 with 13 and $16.9 million, and FY2026 with 10 and $10.6 million; the rest are withheld because of low counts. Both loss measures, cancellation and charge-off, stay hidden at the source, so no floor can be cited, and a hidden value is not a zero.

Testing a central Indiana center

A study for a center should test licensed capacity against the enrollment the trade area can fill, tuition levels of competing centers, staffing ratios and the wages needed to meet them, and the cost of a build or conversion that satisfies licensing. Since loans at the midpoint run past half a million dollars, the study needs to show ramp-up of enrollment month by month and still cover the payment. The appraisal faces a special-purpose building and has to address how it would be valued if the use ended.