SBA 504 Child Care Center Feasibility Study in Utah

Child care centers rank sixth of 39 among Utah's 504 classes, a high place, even though the state is 14th for the class when loans are counted nationally. Across the 43 loans, $32.3 million was approved in FY2017 to FY2026, at a median of $562,000, which is 0.74x the nationwide 504 median for child care, and half of the loans lie from $346,000 to $875,000. The middle of the distribution is tight: the interquartile span is narrow and the loans sit in a close range.

Two counties hold most loans

Salt Lake and Utah counties have 14 loans each, which together account for most of the cell. Weber has 4, Davis 3, and Cache, Summit and Washington 2, with Millard and Sevier 1. This cell's table lists no lender at all, which leaves the holders of these notes unknown. Franchise share is 4.7%.

How often loans cancel

Cancellation after approval was at least 2.6% of approvals through FY2024, and if loans not yet disbursed are classed as cancelled the upper bound becomes 7.7%, a spread that points to a few approvals still unfunded. Approvals moved from 3 and 5 in FY2017 and FY2018 to 9 in FY2022 and 6 each in FY2023 and FY2024, before a drop to 1 loan in FY2025 and a recovery to 3.

What is withheld and what is blended

The charge-off rate is not published, since Utah child care has under 30 funded loans and Loan Analytics shows no rate below that count by its own rule; an empty cell here is not a zero. Family child care homes are counted together with centers, so some of the loans may finance a smaller, home-based operation. A reader should keep that blend in mind.

The Utah study checklist

Start with Utah licensing rules as they bear on room capacity, child-to-adult ratios, yard space and fire exits, then test demand from working families in the trade area, competing centers and waiting lists, tuition levels, and the hiring of enough teachers. Because 504 funds the building, show what the building would be worth if reused as a school or office, and run debt service coverage on a lease-up that fills slowly. Subsidy dependence and seasonal enrolment deserve a line each, and the budget should price the building, playground and safety work before any revenue is assumed.