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

Missouri child care: modest loans, heavy losses

Missouri child care borrowers take smaller loans than their national peers and, so far, have seen worse outcomes. The 135 approvals under 7(a) from FY2017 through FY2026 total $88.6 million, with a median of $317,200, or 0.82x of the nationwide mark. The central half of loans lies between $135,750 and $678,900. Missouri is 19 among states on loan count, and child care ranks 6 of 39 inside the state. Franchise flags appear on 14.8% of loans, so most centres are independent operations.

Holders and counties

The St. Louis side of the state dominates: Saint Louis County has 26 loans, Jackson 19, Saint Charles 16, Clay 11 and Boone 9. Among holders, U.S. Bank, National Association and The Central Trust Bank tie at 12 loans apiece, yet their dollars diverge sharply, $7.6 million against $903,300. The Bank of Missouri holds 7 loans for $1.1 million, CDC Small Business Finance Corp. holds 7 for $350,000, and Guaranty Bank holds 6 for $2.6 million. Those entries come from SBA's holder records; they identify who carries the loans and do not say what any of these lenders ask of a borrower.

What the cohort floors say

Here is the number that deserves a lender's attention. Of 52 loans that disbursed between FY2017 and FY2021, a floor of 7.7% has been charged off, and within five years of approval the share is 5.8%. With open loans still capable of failing, the true figure can only rise. Cancellations are lower: cancellation touched at least 9.5% of the approvals up to FY2024, and the harsher tally shows the identical 9.5%, meaning almost no approved loan lingers undisbursed.

A study for a Missouri child care loan

A study for this loan must settle licensing and enrolment before any financial question. Who lives near the site, meaning how many young children are within reach, what do existing centres charge and how full are they, and does the staffing plan meet the ratios the state sets? Payroll is the dominant expense, and the charge-off floor above argues for a downside case where enrolment ramps slowly and a teacher turns over. Build-out for a converted building, playground and safety work should be costed explicitly, and the appraisal must support the property pledged. Debt service coverage should be computed on stabilised enrolment and again on a slower fill.

One caveat about the data: SBA groups centre-based and home-based child care under a single industry code, which means family homes cannot be pulled out of these Missouri totals.