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

Cancellation and size both stand out

Two measures set Virginia child care centers apart in 7(a) lending. The cancellation floor is 21.6% of the FY2017 to FY2024 approvals, and 22.4% if loans still undisbursed count as cancelled, which means roughly one approved loan in five did not go forward. And the median of $592,900 is 1.53x the national median for child care, with typical loans from $150,000 to $1.3 million. The cell holds 178 loans and $201.1 million gross. Virginia ranks 16 among states and child care is 6 of 39 inside Virginia. Franchise brands account for 50.6% of loans. In the data, family child care homes cannot be told apart from centers.

Lenders and northern Virginia

In first place is Manufacturers and Traders Trust Company with 19 loans and $5.6 million; Live Oak Banking Company 13 worth $33.4 million, Wells Fargo Bank National Association 13 worth $9.5 million, Customers Bank 8 worth $11.7 million, and First National Bank of Pennsylvania 7 worth $15.5 million. The dollars per loan at Live Oak and First National Bank of Pennsylvania are far above those of the first name. The table lists the current holder, not a lending policy. Fairfax County has 30 loans and Loudoun 23, Henrico 15, Alexandria City 14, Prince William 12, Arlington, Chesterfield and Hanover 10 each, Virginia Beach City 9 and Stafford 6. Northern Virginia accounts for the largest part, and Richmond's counties follow.

Charge-offs

Of 58 loans funded in FY2017 to FY2021, 1.7% are charged off to date, and the share at five years is 0.00%. The cohort is small, and because some loans remain open each figure is a minimum.

What a Virginia child care study has to test

The cancellation floor means a study should plan for what can stop a deal between approval and funding: zoning and use permits for a child care use, building and fire inspections, state licensure, and a signed lease or clear title. Capacity and demand then follow. Show the children each age group's rooms may legally hold, the working-parent households and incomes within a realistic commute, and licensed centers already open, and competing centers, which the SBA data does not count, must be surveyed directly. Franchise units, which are half of the cell, must model fees and territory terms. Set cost lines beside the $592,900 median, separating real estate from improvements, and show coverage through a slow enrollment ramp with full staffing. The appraiser will value a special-purpose property on its income.