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

Pennsylvania child care under 7(a): smaller loans than the country

Child care ranks 4 of 39 among Pennsylvania's asset classes, and the state places 7 among states for the 7(a) program in this class, with 386 approvals from FY2017 to FY2026 worth $265.1 million. What the cell shows, and our test confirms, is the ticket: the median of $256,100 is 0.66x the nationwide 7(a) benchmark for child care, so Pennsylvania centers borrow noticeably less. Loans cluster between $71,250 and $755,625, and franchised centers account for 21.0% of loans.

Banks and places

The first holder is TD Bank, National Association, with 34 loans and $4.4 million, and second place goes to Manufacturers and Traders Trust Company with 30 loans and $5.1 million. Wilmington Savings Fund Society FSB and The Huntington National Bank each have 28 loans, worth $29.7 million and $14.5 million respectively, and Meridian Bank has 13 loans worth $9.0 million. Look at the dollars per loan, which vary widely, and remember that the list is SBA bookkeeping about holders, not about policy. Philadelphia County has 92 loans, Montgomery 42, Allegheny 34, Chester 32, Delaware 27, Lehigh 21, Dauphin 16, Berks and Bucks 12 each and Lancaster 10.

Cancellations and charge-offs

At least 11.7% of approvals made through FY2024 were cancelled as a floor, and 13.1% when loans still undisbursed are included. Charge-offs among the 141 funded loans from FY2017 through FY2021 stand at a floor of 2.8% to date, with 2.1% inside five years. Loans still open can add to both.

Testing a Pennsylvania center

Enrollment demand is first: the working families near the site, the licensed capacity already serving them, and the age mix the center will accept. A study should model staffing to the ratios regulators require, tuition families can pay, and the months a new center takes to fill. Costs for renovation or construction, safety features and play areas should be set against a ticket near $256,100. Run the coverage test with enrollment well below plan, and show what an appraiser would pay for the building if the use changed. Under 7(a) a private lender makes the loan with part guaranteed by SBA.

The record includes in-home providers, because the industry code does not separate family child care homes from centers.