SBA 7(a) Child Care Center Feasibility Study in Connecticut

Connecticut child care: planning regions and the middle of the national range

Child care centers rank 7 of 39 among Connecticut's SBA asset classes, and the state stands 21 among states in 7(a) lending to the class. SBA approved 101 loans from FY2017 to FY2026, worth $56.5 million. The median of $407,000 is 1.05x the nationwide 7(a) midpoint, so Connecticut is close to the national norm for size, with the central band starting at $100,000 and ending at $675,000. Franchised centers make up 23.8% of the loans. What differentiates this cell is therefore less a metric of scale than a mix: moderate loans, a meaningful franchise presence and a mid-table standing among the state's classes.

A geography reported by planning region

Connecticut's county rows are reported as planning regions. Capitol and Hartford each have 14 loans, New Haven 12, Fairfield 11 and Middlesex 9, with Greater Bridgeport, South Central CT and Western CT at 8 each, so activity covers most of the state. Liberty Bank holds 11 loans but only $1.4 million, while Readycap Lending, LLC holds 10 for $8.5 million, a far larger average. Eight loans each, both totalling $4.6 million, belong to Newtek Small Business Finance, LLC and TD Bank, National Association, and Santander Bank, National Association holds 7 for $2.6 million. SBA lists the present holder, and none of these entries describes a lender's criteria.

Cancellation and loss measures

At least 9.1% of approvals through FY2024 were cancelled, and up to 10.4% counting loans still undisbursed. Among 37 funded Connecticut centers, the charge-off rate to date is 5.4%, and by year five it was 2.7%. Both are floors. The gap shows that part of the losses came after the fifth year. Annual dollars peaked at $10.5 million in FY2024 after $2.2 million in FY2020.

One code, two kinds of child care

The industry code that defines this class also holds family child care homes that operate inside a residence, so the figures cannot cleanly separate a licensed center from a home business. A study for a center should state its capacity, licensed ages and building type outright. Demand must be tested by neighborhood: births and young-child population, the share of parents working outside the home, existing licensed seats nearby and waiting lists. Staffing is the central cost and the central risk, since ratios of caregivers to children are set by rule and wages are the largest expense line. The forecast should ramp enrollment gradually, show the payment covered at a realistic fill rate, and keep tuition assumptions consistent with local rates. The appraisal for a purpose-built center depends on whether a later buyer could use the space, so alternative uses belong in the analysis, as does any franchise fee if a brand is proposed.