SBA 504 Child Care Center Feasibility Study in Rhode Island

Second in Rhode Island, and a small-ticket class

Child care centers rank 2 of 39 among Rhode Island's SBA 504 classes, a high place for a small state, though the state is only 22 among states by loan count. Rhode Island's FY2017-to-FY2026 tally is 27 loans, $9.0 million in all. The median of $241,000 is just 0.32x the 504 benchmark nationally, and the middle loans sit between $149,000 and $422,000. Franchise share is 0.00%. Those figures describe buildings far smaller than the child care centers financed elsewhere under this program.

Holders and counties

Ocean State Business Development Authority leads with 15 loans, $6.1 million; the other listed holder, New England Certified Development Corporation, has 6, $1.4 million. Both are the holders SBA shows now. Providence County has 11 loans, Kent 6, Washington 5, Bristol 3 and Newport 2. Year by year, FY2021 reached 4 loans and $2.6 million and FY2022 reached 5 loans and $1.9 million, while FY2025 and FY2026 show 1 loan each, at $331,000 and $558,000.

Not quantified

No cancellation percentage or charge-off percentage appears for this cell, the cohort being too small, and a blank is not a zero. In-home family providers are not distinguished from centers in the industry code.

What a Rhode Island child care study must settle

The study must show that a small building can pay for itself. Start with children in the catchment and the licensed capacity already operating, then show tuition, enrolment speed and any subsidy reliance. Staff ratios and licensing space rules determine payroll and room layout. Since the money buys property, the study should compare the cost with similar buildings, address parking and drop-off safety, and explain why the site is the right one in a state where space is limited. Debt service must hold during a slow fill, and a lender will ask how an appraiser expects the building to be valued if it were sold to a non-child-care user. The state's small size makes competing centers easy to count, and the study should do it. Parking, outdoor space and drop-off flow often decide whether a small site works. A small building also limits how much the center can grow, so the study should show the capacity ceiling and the revenue it implies at full enrolment. Enrolment letters from parents, where available, would add weight.