What if you received all the money that was due to you as a childcare business owner?

how to get funding for a daycare business


If you’re an established child care center or considering starting a new one, getting funding is always a top priority. Often, it can be challenging to pay for the things we need in order to have a successful daycare, especially if you are starting a brand new one.

Start-up costs can quickly add up! Funding can also be used for many things whether it’s to start your new school, to improve your programs, pay your staff more, and/or make improvements to your facility.

Plus, this is an industry of small margins, so any opportunity to be creative in finding funding options is extremely helpful.

So how do you know what money is out there and/or what money you are eligible for?

Let’s start with established schools

how to get money for a daycare

Every state is different along with different federally funded programs. This list is not all-encompassing but will provide you with a good amount of options to research. 


  • Food program: The Child and Adult Care Food Program (CACFP) is a federal program that provides reimbursements for nutritious meals and snacks to eligible children and adults who are enrolled for care at participating child care centers. The food program is a great way to offer nutritious meals and snacks for a free or reduced price. 
  • Grants: Stay in touch with your local coalition, child care associations, licensing, economic development groups, etc. for information on timing-based funding opportunities. Many are state-specific, so search for your state funding opportunities specifically. 
  • Free PreK and/or Head Start: Take advantage of local programs such as free PreK and/or Head Start. States often reimburse schools for offering these types of programs which allows for families to bring their children for a discounted or free rate. Though this money is intended for families in need, the result helps keep your schools full. 
  • Premium Services: Offer services such as drop-in care or flexible scheduling options such as part-time enrollment, allowing a school to charge a premium for that service.
  • Accreditation/Quality Ratings: Schools that achieve various levels of accreditation can earn extra money for their schools.
  • Ancillary Revenue (not earned from the primary core of the business): Consider implementing money-generating products such as weekend activity kits, dinner kits, and ECE training programs.
  • Government aid/stimulus funding/tax credits: This is the exciting one! Right now there are a few government aid programs due to COVID. Many schools took advantage of the Payroll Protection Program (PPP) and other child stabilization grants. One tax credit that has often been overlooked, is the Employee Retention Credit (ERC).  ERC came out around the PPP time so many thought they didn’t qualify and were often told this by their accountant or CPA. 

What is Employee Retention Credit (ERC)?

Employee Retention Credit

Introduced in the Coronavirus, Relief, and Economic Security Act (CARES Act), the ERC was created to encourage employers to keep their employees on the payroll during the months of 2020/21 affected by the COVID pandemic. 


The great thing about ERC is there is no need to pay it back and is in a sense, similar to the stimulus check that everyday taxpayers received in the past. Also, there is no stipulation as to what the money has to be used for, unlike the PPP. 


How do you qualify for the Employee Retention Credit? 

  • 3 employees to 499 employees to qualify
  • For 2020 and 2021 be open
  • Reduction in hours
  • Limited capacity
  • Supply chain issues
  • Transportation delays or issues
  • Social distancing
  • Reduced services
  • Virtual or hybrid work environment
  • Instability to work with customers or vendors in person
  • Additional sanitation measures
  • Limited walk traffic
  • Canceled trade shows or marketing events
  • Filed quarterly 941 payroll tax payments to the IRS
  • DOES NOT require a reduction in revenue! 


What amount of money are we talking about? 

  • 2020- $5k per W2 employee 
  • 2021 - $21k per W2 employee


In essence, you can qualify for up to $26k per employee for TWO years! Again, SHOW ME THE MONEY!  

Calculator Tool - Want to know how much you could be receiving?

*This calculation is an estimated amount you could potentially receive. 

Calculate what your school could earn

Interested in learning more about receiving your Employee Retention Credit? We can help! Complete the form below:

As you can see, as an established daycare, there are many ways you can find additional funding for your school. 


The best thing you can do to make sure you don’t miss money you could be getting is to:


funding for daycare startup

When starting a new child care center, funding is usually the part entrepreneurs have the hardest time with. Many people trying to open a business don’t have the money they’ll need to do it, or at least they don’t have all of it.

You’ll have to figure out how much money you’re going to need first, which your well-laid business plan will help with, and then you can go about finding the amount of cash it will take. Rule of thumb - often a 20% financial commitment is required by most banks to even be considered for a loan.

If you don’t have the money needed, then start raising funds. Here’s some good news. There’s a high demand for daycare services so your quest should be fairly easy.


Here are some methods for finding the funding needed to open your daycare

  • Ask your family and friends: These are people who know you and support you most of the time. You’ll likely find someone who wants to help you here.
  • Look for angel investors: There are some affluent people who like to help new endeavoring business owners. If you have a good business plan and you can get in to see someone like this, you might be able to get a chunk of money from someone who believes in your vision. Do a little research and find people to ask who have children so they understand the need.
  • Apply for a business loan: This option will require some work on your part to organize a presentation that is solid enough for a financial institution to lend you money. Often, we encourage our clients to get pre-approved based on the size of the school and the location they desire to purchase. The bank will require three years' worth of financial projections, an understanding of your qualifications, business plan, feasibility study, and marketing plan. It’s all about presentation and confidence! 


Let us help you package your bank presentation and financial projections!


  • Form strategic alliances: More and more we are seeing partnerships established with local business owners that have employees who need child care and that have the space to accommodate one. Consider any in your community that you may approach (manufacturers, hospitals, commercial and real estate developers, and so on.) We are also seeing more and more community groups such as economical development groups spearhead finding childcare partners for their communities.
  • Grants: If you do the research, there are several government grants that will provide the funding necessary for you to start your daycare. Here is a great daycare start-up funding resource to start your research. 


Looking for help starting your new child care center? Book a call with child care consultant Caroline Jens Today!

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