SBA 504 Child Care Center Feasibility Study in Missouri

Small tickets and heavy attrition

Missouri's SBA 504 child care record is marked by small loans and heavy cancellations. The median loan of $406,500 is only 0.54x the 504 benchmark nationwide, and typical loans sit between $218,250 and $1.2 million. Cancellations are high: a floor of 20.0% for approvals through FY2024, and 30.0% in the ceiling case that counts loans never disbursed. SBA approved 38 loans between FY2017 and FY2026, worth $28.6 million, and child care centers rank fourth of 39 positions in Missouri's asset-class ranking, with the state at 18 among states.

Development companies and counties

Rural Missouri, Inc. holds 11 loans worth $13.0 million, St. Charles County Economic Development Council holds 11 worth $7.5 million, and Enterprise Development Corporation holds 7 worth $4.5 million. The first has a far larger average than the second, so the same count hides different loan sizes. These are the holders SBA reports now. Saint Charles and Saint Louis counties have 11 loans each, Boone 5, Jackson 3, and Callaway 2, with single loans in Christian, Clinton, Cole, Franklin and Pulaski. Franchise affiliation reaches 21.1% of loans.

Year by year

FY2017 brought 7 loans and $3.3 million, FY2018 brought 6 and $6.7 million, and then the flow shrank: FY2021 had 3 loans for $394,000, and FY2022 to FY2024 had 2 each, with FY2024 at $622,000. FY2025 and FY2026 each show 4 loans, at $2.2 million and $5.4 million. No charge-off rate is shown for the older loans because their cohort is under 30 loans. On coding, in-home family providers are lumped with centers, since both fall under one industry code.

What a Missouri child care study has to settle

A 504 loan finances land, building and long-lived equipment, so the study has to justify the property: whether the site's size, traffic flow, drop-off safety and licensing requirements fit a center, and how the cost compares with similar buildings. Enrolment demand needs a catchment analysis of young children, working parents and nearby capacity, and the study should state how quickly classrooms fill. Staffing ratios and wages are the main costs, and the franchise fee if a brand is used. With cancellations this high, the study should lay out permits, timing and equity. A weak first year should be shown beside the base case.