SBA 504 Child Care Center Feasibility Study in Illinois

Real estate loans for child care

Illinois child care centers hold 109 SBA 504 loans, $86.7 million gross over FY2017 to FY2026. The state is 4th among states for the pairing and child care is the 2 of 39 class in Illinois under 504, a sign that the program is a main route to owning a center building. The median loan is $496,000, 0.65x the national median, and central loans stretch from $295,000 to $1.3 million. Franchised centers account for 18.3% of loans, a sizeable minority.

SomerCor 504, Inc. holds 54 loans and Small Business Growth Corporation 48, so two certified development companies lead the table by a wide margin. The counts come from SBA's current-holder records. Cook County accounts for 44 loans, with DuPage and Will at 10 each, Lake 9, McHenry 6, Sangamon 5 and Kane 4. Volume has climbed: a start of 5 loans in FY2017, 5 more in FY2018, then 17 in FY2022 and 15 by FY2024.

Cancellations and a withheld rate

The cancelled share of approvals starts at 12.0% on the floor, yet the ceiling is far higher, 24.1%, once undisbursed loans are written in as cancelled. That gap means many approved centers had not yet drawn funds when SBA's file was cut, so the true cancellation figure sits somewhere between the two. For charge-offs, the funded cohort is too small to report a rate, so the cell is left blank on purpose; nothing should be read into the gap, and it certainly is not a zero.

Licensing, enrolment and the building

The class cannot distinguish centers from family child care homes, since its industry code also covers in-home care. An Illinois study should state the center's capacity and licensing category. It should test enrolment demand within the catchment, competing centers, the age mix that drives staffing ratios, tuition against local household income, and the wage market for teachers. Because 504 funds the building, compare build or purchase cost with value and consider whether another operator could use the space. Debt service coverage needs a lease-up ramp and a lower-enrolment case, and the appraisal will have to value business and building together. The study should also say how a staffing shortage or a change in licensing rules would show up in the numbers, because those are the events that tend to separate an approved plan from one that performs.