SBA 504 Child Care Center Feasibility Study in Massachusetts

A third-ranked class with smaller-than-national loans

Child care ranks third of 39 among the classes Massachusetts finances through SBA 504, and the state is 7 among states for the program and class. Across FY2017 to FY2026 there were 78 approvals totalling $67.7 million. The median of $450,500 comes to 0.59x of the national 504 benchmark, so centers here are financing considerably less than their national counterparts, and half of loans lie between $300,000 and $922,750. Franchise flags appear on 11.5% of loans.

Development companies and counties

Bay Colony Development Corporation sponsored 39 loans worth $29.6 million. Next is Granite State Economic Development Corporation (21 loans, $26.2 million), and last is the New England Certified Development Corporation, with a count of 10 and $9.0 million. The table reproduces SBA's file and does not rank the companies. By county, Middlesex has 22 loans, Essex 15, Norfolk 12, Worcester 9 and Plymouth 7.

Floors, and one withheld rate

Lapsed approvals are at least 9.5% of the FY2017 to FY2024 group, yet the ceiling reaches 15.9% once undisbursed loans are added, a considerable gap. There is no charge-off percentage on this page: the funded early group was too small to publish a rate, so nobody should read the record as zero.

What a Massachusetts child care study has to test

A feasibility study has to start with licensing, because the state's rules on space per child, ratios and staff qualifications set both capacity and cost. Next comes demand: families with young children within reach, the tuition nearby centers charge, and waiting lists. Since 504 funds real estate and equipment, the study should test the building, whether bought, built or renovated, with an appraisal that supports its value and a realistic budget for playground, safety and accessibility work. Smaller-than-national loans suggest modest projects, so the model should show how many enrolled children cover payroll, rent or mortgage and the loan payment, and how long enrolment takes to build. That spread between 9.5% and 15.9% argues for permits and equity being ready before approval. The study should also explain the borrower's plan for hiring and keeping teachers, since turnover affects licensing compliance and parent confidence, and show a contingency for the months before enrolment reaches the level the budget needs.

Classification note: SBA files home-based care with formal centers, so a family provider's experience is mixed into the dollar figures above.