Child Care Center Feasibility Study in New Mexico

A two-program class in a thin market

New Mexico child care is a modest corner of the SBA book that uses both programs. SBA's FY2017 to FY2026 files hold 33 child care center loans here, totalling $22.3 million gross. SBA 7(a) carried 23 of them and SBA 504 carried 10, a mix that points to borrowers buying or building facilities as well as financing working capital. The median loan was $400,000, with the middle half running from $225,000 to $840,000, or 0.88x the national median for the class. The state ranks 43 of 53 for this class, child care places 10 of 39 among asset classes in New Mexico, and the location quotient is 0.75x, so centers weigh a little less in New Mexico lending than they do nationally.

Where the loans are and who makes them

Bernalillo County dominates with 16 loans. Dona Ana and Sandoval follow with 3 each, then Eddy, Roosevelt, Santa Fe and Valencia with 2 each, and Chaves, Lincoln and San Juan with 1 each. Among 504 sponsors, Capital Certified Development Corporation stands out: 6 loans, $5.4 million. Franchise brands hold 12.1% of loans. Timing is uneven: FY2019 produced 8 approvals, while FY2021 and FY2022 produced 1 each, and FY2026 shows 2. Approvals this sparse mean a lender comparing a new request to precedent has few close comparables in the state, and the study should say so openly.

Limits of the code and of the outcome data

One coding limit matters here. The industry code for child care centers also holds in-home child care, so in these counts the two types of provider are mixed together, and a very small borrower in the figures may be a home operator rather than a center. No cancellation or charge-off rate appears for New Mexico child care, since each cohort is under 30 loans; the blank is not a zero. Rates on other pages are floors only.

Testing a New Mexico center

Demand for a center is local and measurable: children of the right ages within the trade area, the share of parents in the workforce, and the supply of licensed seats already open. A study should count competing capacity by age group, since infant rooms are costlier to run than school-age rooms. Cost is next, conversion or ground-up, set against a median near $400,000, with the larger 504 loans going to real estate. The coverage ratio must survive a slow enrollment ramp and the staffing ratios a licensed center must keep. The appraisal then values a special-purpose building, so the income case in the study should be one an appraiser can support.