Child Care Center Feasibility Study in Kentucky

Kentucky child care: Louisville first, everyone else far behind

Kentucky's child care centers took 65 SBA loans over the FY2017 to FY2026 span, with $39.8 million approved. The state ranks 35 of 53 for the class, though child care ranks 8 of 39 among the classes financed in Kentucky. The location quotient of 0.84x puts the state under the national share. The map is lopsided: Jefferson County has 24 loans, and the next counties, Allen, Campbell, Fayette and Kenton, show 4 each. A center outside Louisville has few local lending precedents to point to.

Smaller loans and a wide spread

The median is $259,200, a bit over half (0.57x) the class median nationally. The spread is wide, from $50,000 at the bottom of the middle band to $755,000 at its top, and it mixes start-up working capital loans with building purchases. Of the 65 loans, 59 are SBA 7(a) with 6 under SBA 504. The franchise share is 7.7%, higher than in many states, so a small group of branded centers is in the mix. The Huntington National Bank has 10 loans and $3.4 million, First Financial Bank, National Association 7 loans and $4.5 million, Republic Bank & Trust Company 6 loans and $1.7 million, and Northeast Bank 5 loans and $775,000. First Financial's dollars outrun its count, so it handles larger center projects than Northeast Bank does.

Home-based providers and licensed centers cannot be told apart here, since both share one NAICS code. Some of the smaller loans, including those near the $50,000 end of the range, may be home-based providers, and a center operator should not read them as comparables for a licensed building.

Completion, losses and the study

The cancellation floor is 13.3% for FY2017 to FY2024 approvals, and 15.6% when undisbursed loans are counted, a ceiling. That is a real chance that an approved center does not open on schedule or at all. No Kentucky charge-off rate is shown: Kentucky lacks 30 seasoned loans for a printable rate, and nothing should be read into the gap. A Kentucky study must test enrollment demand among working households, licensing requirements on ratios and space, and the competition within a short drive. It must price the build-out, outdoor space and safety systems, and test coverage on an enrollment ramp that fills slowly. The appraisal must say what a purpose-built center is worth if it closes. Recent volume has risen, to 12 loans and $6.8 million in FY2026 from 5 loans in FY2017, so competition is growing.