Child Care Center Feasibility Study in the Seattle-Tacoma-Bellevue, WA Metro Area

Heavy tickets in a market of average weight

Seattle-Tacoma-Bellevue gives child care centers an average place in its lending: the location quotient is 1.03x, the area is 15 of 493 nationally and the class is 8 of 39 locally. The loans, though, are large. A median of $802,100 is 1.77x the national median, and the central half runs from $350,000 to $2.0 million. Between FY2017 and FY2026 SBA approved 154 loans here, worth $204.3 million, a heavy dollar total for a class with so few loans.

Counties and programs

King County holds 111 of the loans, Pierce 24 and Snohomish 19. SBA 7(a) accounts for 131 loans and SBA 504 for 23, with franchised centers at 18.8%. Years printed are FY2017 (14 loans, $9.2 million), FY2018 (14, $14.4 million), FY2019 (13), FY2021 (15, $21.9 million) and FY2022 (13, $19.9 million). FY2020 and FY2023 through FY2026 are suppressed in the source for lack of loans, which hides the recent trend; the blank years are not zeros.

Seattle-area holders

Live Oak Banking Company holds 13 loans under 7(a), worth $38.0 million, well ahead of Enterprise Bank & Trust on the same number of loans ($14.5 million). KeyBank National Association holds 10, Wells Fargo Bank National Association 9 with $18.5 million and Banner Bank 7 with $6.0 million. No 504 company appears. SBA gives current holders, not origination, and the table is silent on credit standards.

Cancellation, charge-offs and a shared code

Among loans approved in the FY2017 to FY2024 years the cancellation floor is 12.5%. Seattle child care also lacks any published charge-off rate or fuller cancellation measure, the loan counts being thin. One industry code is used for centers and for in-home child care, so a few loans may belong to home-based providers.

Testing a Puget Sound center

Washington's licensing regime and the staffing ratios it requires should drive the study's cost model, since payroll will outweigh rent. The study should estimate the number of children the site can legally hold, test tuition against local household incomes in the catchment rather than the metro, and show enrollment ramp assumptions with a slow case. With a $802,100 median many projects likely include real estate, so ownership versus lease should be stated and the appraisal's value of a building built for child care considered. King, Pierce and Snohomish counties are placed in areas under the July 2023 delineation.