Larkpine Lending Group, an Iowa City, IA small-business funding service, explains how daycare centers in Johnson County, Iowa fund three needs: payroll with working capital or a line of credit, classroom space with term loans, and vans, furniture and playground equipment with equipment financing, plus what partners review.
The shape of a daycare budget
Johnson County, IA had 69 child day care employers in 2023 with 1,177 paid employees and about $21.9 million in annual payroll (County Business Patterns 2023). Only 17 of the 69, 24.6%, had fewer than five employees. Space and equipment matter, but wages are a large recurring bill that must be paid every period regardless of when tuition and subsidy payments arrive.
Business loans for daycare providers: payroll
A center whose revenue arrives as weekly family payments, monthly subsidy payments and occasional grants has an uneven inflow and an even outflow. A working capital loan covers a single gap; a line of credit covers gaps that recur. Partners read enrollment, the share of revenue from programs that pay in arrears, and how reliably those payments arrive.
Illustration (not an offer)
A center enrolling 55 children has a $52,000 monthly payroll. If a program payment covering a third of revenue arrives on the 20th instead of the 5th, two payrolls fall before it lands. The gap is a timing gap, not a loss, and is funded and repaid as one.
How to get a business loan for a daycare's space
Adding a classroom, converting a space or moving to a larger building means build-out costs plus the months before new enrollment fills. Improvements to a leased space fit a term loan; buying a building is property lending, which this site does not cover. Partners will ask for waitlist numbers and the cost per added slot.
Daycare equipment
- Vans for transport
- Cribs, cots, tables, chairs and storage
- Playground equipment and surfacing
- Kitchen equipment for meals and snacks
- Check-in and security systems
Each can be financed as equipment; see the child care funding page for more on equipment options.
Business loans for childcare: what partners usually review
- Enrollment by month and capacity
- Revenue by source: families, programs, grants
- Payroll and ratios of staffing to enrollment as you report them
- Lease terms
- Loans and equipment payments the center already carries
Grants and public programs
Grants and public loan funds are separate from partner funding. Those programs are separate, with their own rules; we do not administer or represent any of them.
Providers with no paid employees
Census also counted 235 child day care businesses with no paid employees in Johnson County, IA in 2024 (Nonemployer Statistics 2024, NAICS 2022 code 62441). Those are counted in a different program and year from the 69 employers above and are not added to them. County figures are on the Iowa City, IA page; more articles on the blog.
Putting the three pieces together
A center planning to add a toddler room might need all three structures at once: a term loan for the build-out, equipment financing for cribs, tables and a second van, and a line of credit for payroll while the new room fills. Asking for them together, with one budget, lets a partner see the whole plan rather than three separate requests.
By Larkpine Lending Group · Updated