Child Care Center Feasibility Study in North Carolina

North Carolina centers borrow well above the class median

Loan size is what separates North Carolina child care from both the state's SBA lending overall and child care nationally. The median approval is $672,500, 1.49x what child care borrowers take nationally, and our screen finds it apart from both comparators by the margin and beyond sampling noise. Half of North Carolina center loans sit between $287,000 and $1.4 million. Volume is strong as well: 271 loans and $316.4 million from FY2017 to FY2026, a rank of 11 of 53 among states, fifth of 39 classes, and a location quotient of 1.25x.

Franchised centers account for 36.2% of loans, a high share that may help explain the larger tickets, since brand systems usually build purpose-designed facilities. SBA 504 carries 50 loans, and Business Expansion Funding Corporation holds 42 of them for $54.5 million. On the 7(a) side, which carries 221 loans, Live Oak Banking Company holds 14 loans worth $49.9 million, TD Bank, National Association 9 worth $14.8 million, and First National Bank of Pennsylvania 9 worth $12.4 million, while Bank of America, National Association and First Bank hold 11 each, for $7.7 million and $4.1 million. Wake County with 72 loans and Mecklenburg with 52 dominate, far ahead of Iredell at 14 and Cabarrus, Durham and Union at 10 each.

A clean loss floor and a wide cancellation range

North Carolina's 108 center loans funded over FY2017 to FY2021 have produced no charge-off yet, a 0.00% floor that holds inside five years too, though newer loans are not yet in the cohort. Cancellation is where risk shows: North Carolina approvals from FY2017 to FY2024 show cancellations of 11.7% or more, and 14.8% once undisbursed loans are included. Lending has climbed, from 15 loans for $21.9 million in FY2022 to 41 loans for $37.5 million in FY2025 and 34 for $49.1 million in FY2026.

What a North Carolina center study must carry

At a typical ticket near $672,500, a North Carolina center loan usually involves a building, so the study has to work at the scale of real estate. Demand should be measured by young children and working households inside the drive-time area, against licensed seats already open, with particular care in Wake and Mecklenburg where the lending is concentrated. Cost needs construction bids for a licensed facility and, for a franchise, the brand's building specification. Debt service coverage should reach stabilised enrollment only after a realistic ramp, and the appraisal must deal with a special-purpose building whose value depends on its use. The data has one blind spot: family child care homes cannot be split from centers, so the cell includes small home-based providers.