SBA 504 Child Care Center Feasibility Study in Iowa

Iowa places child care third of 39 among its 504 classes, a high position, while the state is 22nd for the class on loans counted. The 27 loans total $19.1 million. Its $553,000 median equals 0.73x the nationwide 504 child care mark, and the interquartile span is $226,500 to $885,500. A lender will notice that the median is modest beside the dollars borrowed in neighbouring cells, so projects here look like single-site centers sized to a town. A lender will notice that the median is modest beside the dollars borrowed in neighbouring cells, so projects here look like single-site centers sized to a town. Franchised loans are 3.7%, so these are mostly independent centers. Iowa Business Growth Company holds 13 loans and $7.3 million and is the only lender listed, a record of notes held that implies nothing about method.

Places

Polk County leads with 7 loans, Warren has 5, Scott 3, and Dallas, Dubuque and Johnson 2, with Dickinson, Linn, Madison and Pottawattamie 1 each. Polk and Warren are adjacent central Iowa counties, so the Des Moines area holds a large share of the record, though smaller communities elsewhere borrow too.

A cooling cell

Approvals were 3, 5 and 2 in FY2017 to FY2019, 5 in FY2020, and 4 in FY2021. FY2022 had 2 loans, FY2023 a single loan of $2.9 million, the largest average of any year, FY2024 3 loans and $3.4 million, and FY2025 2. FY2026 shows none. A lender looking for a trend sees a decline in count, but the dollars per loan have risen.

What is not shown

Iowa's child care cohorts are small, so no cancellation or charge-off percentage is shown. Because home-based providers are coded with centers, a few loans here may fund a smaller, in-home business. Readers should keep that blend in mind when comparing the cell with a licensed center plan.

Questions for an Iowa center

A study begins with licensing: capacity per square foot, staff-to-child ratios, outdoor space and fire code. It should test demand from working families near the site, the tuition level against local incomes, waiting lists at competitors, and the supply of teachers. State subsidy programs affect revenue, so the share of children on subsidy matters. Because 504 funds the building, show its value as a center and as general space, and run coverage on both loan pieces with enrolment below plan for the first two years.