SBA 504 Child Care Center Feasibility Study in Florida

A real-estate program, and a Florida lead

SBA 504 is the program that pairs a certified development company with a lender to finance fixed assets, and in Florida it has financed a great many child care centers. Nationally Florida is 1 for this program and class, while child care is 2 of 39 in the state itself. The files for FY2017 to FY2026 record 253 loans and $280.7 million gross. The distinctive measure is loan size: a median of $915,000, which is 1.21x the national 504 median for child care, with the middle of the range from $406,000 to $1.6 million. These are buildings and sites, not just working capital. Franchise brands hold 18.2%. On coding, in-home care sits under the same industry code as centers, so the two cannot be told apart.

The two companies that carry the book

The table lists certified development companies, not banks. Florida First Capital Finance Corporation, Inc. has 126 loans worth $147.5 million, and Florida Business Development Corporation has 113 worth $120.1 million, so the two together account for most of the cell. Sunshine State Economic Development Corporation is third with 13 loans and $8.2 million. The figures are SBA's records of loans each company holds or held, and they say nothing about its practices. By county, Hillsborough has 24, Palm Beach 23, Orange 21, Miami-Dade 20, Broward 19, Pasco 12, Brevard and Lee 10 each, Saint Johns 9 and Pinellas 8. Approvals rose from 9 in FY2018 to 37 in FY2025.

Cancellation and charge-offs

The cancellation floor is 13.8% for FY2017 to FY2024 approvals, but it reaches 19.7% when loans still undisbursed count as cancelled, a difference of several points. In the 77-loan cohort funded across FY2017 to FY2021, the charged-off share reads 0.00% both now and at five years. The small cohort and the open loans mean that is only a floor.

Testing a Florida 504 child care project

Land and a building are usually involved in 504, so the study must test the real estate and the operating business. Start with licensure and capacity, then the market: how many young children live near the site, how many parents work, existing centers and their waiting lists. New competitors near the site belong in the same test. Cost lines should separate land, construction or renovation, playground and safety work, furnishings and working capital, and set the total beside a $915,000 median. Construction time and interest during it belong in the cost lines, so the schedule matters. The loan has to be serviceable through a slow enrollment ramp, with payroll fully staffed. An appraiser will value a special-purpose building largely on income, so the revenue case has to hold up.