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

Larger centers, no losses yet, but heavy cancellation

Tennessee child care borrowers take loans larger than the national pattern: a median of $544,500 is 1.41x of the national benchmark, and the middle of the distribution spans $201,900 and $1.3 million. Over the ten fiscal years, 82 approvals under 7(a) add up to $92.0 million; Tennessee places 26 among states, and child care is 9 of 39 inside the state. Franchising is common at 32.9%. The 34 early-cohort loans show nothing charged off, 0.00% on both clocks, but cancellation is the weaker number: it reached at least 15.6% among earlier approvals, with a ceiling of 18.8%.

Holders and counties

U.S. Bank, National Association holds 11 loans worth $7.2 million. Newtek Bank, National Association holds 6 for $1.1 million, and Customers Bank holds 5 for $11.4 million, the largest average ticket on the list. The holder table is drawn from SBA's records and contains no verdict on any lender. Shelby County has 13 loans, Davidson 12, Knox 10, and Sumner 7, with Montgomery and Williamson at 6 each.

Reading the zero with care

A reading of 0.00% charged off is a floor measured on a short list. With so few loans, one or two defaults would change the picture noticeably, and open loans can still go wrong.

What a Tennessee child care study has to test

A study must show that enough families live near the site to fill licensed capacity at the tuition the budget assumes. That means counting preschool-age children, comparing nearby centers by price and waiting list, and noting employers whose workers need care. Staff-to-child ratios set the payroll, and turnover among teachers is a recurring cost, so the pro forma should carry wage levels that retain people. A franchise carries royalties and brand standards that belong in the margin. Because loans here run larger than average, the study should explain whether the money buys a building, builds one or renovates a lease, and the appraisal should support any real estate. Given how many approvals lapse, licensing and zoning approvals should be lined up early. The loan payment's coverage ought to be demonstrated twice: on stabilised enrolment, and on a slow ramp.

Note that in-home providers share this industry bucket, so the figures cannot isolate family homes from formal centers.