SBA 7(a) Child Care Center Feasibility Study in North Carolina

No charge-offs in the North Carolina child care cohort

Child care centers hold 6 of 39 places among North Carolina's asset classes, and the state ranks 10 for the number of 7(a) loans to the class. SBA has approved 221 since FY2017, worth $252.6 million, across ten full fiscal years. On losses, among the 91 loans that funded in FY2017 through FY2021, none stand charged off today (0.00%), and none within five years (0.00%). Cancellation was 10.2% for FY2017 to FY2024 approvals and is unchanged when undisbursed loans are counted. Both measures are floors, so open loans can still change them.

Loan size and franchising

A median of $540,000 equals 1.40x the nationwide 7(a) figure, while the middle of the distribution reaches from $246,000 to $1.3 million. Franchised centres account for 35.7% of loans, a large minority. A child care centre is usually a purchased or built building with classrooms, a playground and licensing requirements.

Lenders and counties

Live Oak Banking Company holds 14 loans, Bank of America, National Association 11, First Bank 11, TD Bank, National Association 9 and First National Bank of Pennsylvania 9. These are the current holders of the loans in SBA's file; they say nothing about any bank's criteria. Wake County has 57 loans and Mecklenburg 43, the two largest counts, followed by Iredell with 11, Cabarrus with 10, and Durham and Union with 8 each. Volume was 8 loans in FY2022, and then rose to 35 in FY2025 and 29 loans worth $41.5 million in FY2026, the final year of the span.

The code

The code does not distinguish home-based providers from centres, because in-home child care sits inside it. The figures above may therefore include small home-based providers alongside licensed centres, and a project for a large centre should be read as an upper part of the distribution.

What a North Carolina child care study has to test

Demand is measured in children within a commuting distance: the age mix, the families' employment and the licensed capacity already in the area. The study should model enrolment by age group, with staffing and cost per child for each, and it should test tuition against the market and against what local subsidies pay. Licensing ratios, staff turnover and wages drive the margin. A loan near the $540,000 median should be reconciled with the building cost and playground, and the debt model should assume a slow fill-up. Appraisers will want to see enrolment history or a credible ramp.