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

A very small median and a hard loss record

The Massachusetts child care cell is marked by two numbers that pull in opposite directions. The median loan is $100,000, only 0.26x of the nationwide figure for child care, so these borrowers ask for a fraction of what a centre costs elsewhere. And yet 11.1% of the 72 loans that funded in FY2017 through FY2021 have been charged off to date, with 9.7% gone inside five years of approval. Both charge-off figures are floors. A small loan, in other words, did not make a safe one.

The shape of the file

SBA's 7(a) program approved 216 loans for child care in Massachusetts since FY2017, worth $100.4 million; the state ranks 11 for the number of such loans and the class holds 6 of 39 places in the state's table. The central loans range from $50,000 to $350,000, which suggests the file contains many small providers filling out rented space, quite apart from larger purchases. Franchised centres account for 19.4% of loans. In-home providers share the industry code, so home-based care is not filtered out of these numbers.

Cancellation

Cancellation reached a floor of 10.3% of approvals dated FY2017 to FY2024, and as much as 13.8% when undisbursed loans are added. That gap tells a borrower some approved projects stall before money moves, often on lease, licence or renovation timing.

Lenders and counties

Eastern Bank is the most frequent name in SBA's listing at 46 loans, ahead of Santander Bank, National Association with 19, TD Bank, National Association with 14, and Customers Bank and Manufacturers and Traders Trust Company with 10 each. The listing records present holders and not lending standards. Middlesex County has 66 loans, Essex 43, Norfolk 29 and Worcester 26. Annual volume fell to 5 loans in FY2020 and has since climbed to 36 in FY2025 and 35 in FY2026.

What a Massachusetts study has to test

Licensing and staffing ratios dominate the economics, so the study should begin with enrolment by age group, the tuition that parents in the catchment can pay and the state subsidy rates that apply. Wages and turnover in a tight labour market are the second test. Leasehold improvements for classrooms, restrooms and outdoor space should be reconciled with a loan near $100,000, and the lease should run long enough to recover them. Because losses in this cell have been heavy, the repayment test should include a slow fill-up and a mid-year loss of a lead teacher, and the appraisal will rest on enrolment evidence.