SBA 504 Child Care Center Feasibility Study in Texas

Child care real estate, Texas scale

Child care centers in Texas rank first of 39 within the state and 3 among states for SBA 504, with 170 loans and $254.5 million across FY2017 to FY2026. The distinguishing metric is size. A median of $1.4 million works out to 1.90x the 504 median childcare borrowers see nationally, and the middle band spans $762,500 to $2.1 million. These are building loans. Franchise loans make up 42.4%, a heavy branded share for a real-estate program.

Development companies

Capital Certified Development Corporation holds 58 loans and $85.2 million, North Texas Certified Development Corporation 37 and $56.2 million, and LiftFund, Inc. 25 and $39.6 million. Greater East Texas Certified Development Company has 17 loans and $32.0 million, and Community Certified Development Corporation 8 and $13.1 million. SBA lists the present holder. Harris County has 30 loans, Collin 18, Williamson 15, Fort Bend 14, and Dallas, Tarrant and Travis 10 each.

Cancellation and a clean loss record

The cancellation floor is 8.4%, rising to 13.0% if loans not yet disbursed are counted, a wide band because construction takes time. No charge-offs show among the 67 loans in the FY2017 to FY2021 cohort, with 0.00% at both measures, though a cohort this small and young is a weak test.

The code

The industry code groups family child care homes with centers and also holds in-home care. Loans of this size nonetheless point to centers in purpose-built or converted buildings.

Years

Approvals ranged between 11 and 21 a year, with 21 loans and $41.2 million in FY2024 and 21 loans and $37.1 million in FY2026.

Testing a 504 child care project in Texas

The first test is enrolment demand by age group around the actual site, then tuition against family incomes, staffing ratios and the licensing path, and the cost of land, building and playground. Since this program finances fixed assets, the study should show how the borrower's equity, the bank loan and the development company loan combine into a total payment that licensed capacity can support. A franchised concept should add its fees. The appraisal should consider how a purpose-built centre would convert to another use.