Larkpine Lending Group, a small-business funding service in Iowa City, IA, explains funding for daycare and child care centers: working capital for payroll, term loans for facility improvements and expansions, and daycare equipment financing for vans, furniture and playground equipment. Johnson County child care counts come from Census County Business Patterns 2023.
| Child day care employer sites, Johnson County, IA, CBP 2023 | 69 |
|---|---|
| Paid employees | 1,177 |
| Under five employees | 24.6% |
| Child care businesses without payroll (2024) | 235 |
| Structures to compare | Working capital, term loans |
Payroll comes first
The county's 69 child day care employers had 1,177 paid employees in 2023, about 17 per establishment on average by our arithmetic, and only 24.6% had fewer than five employees. Few small businesses carry that ratio of workers to locations. When enrollment dips or a subsidy payment runs late, payroll still comes due.
A working capital loan or a line of credit covers that timing gap. The daycare funding article walks through payroll, space and equipment in more detail.
Child care facility loans
Facility needs range from a new classroom or bathroom remodel to an outdoor play area or a move to a larger building. Improvements to a leased space usually fit a term loan; buying a building is property lending, which is outside the structures on this site.
Public or nonprofit child care programs are separate from partner funding. Those exist separately from partner funding; ask a local business center or your licensing consultant about them.
Daycare equipment financing options
- Vans or small buses for transportation
- Cribs, cots, tables and classroom furniture
- Playground equipment and safety surfacing
- Kitchen equipment for meal programs
- Security, check-in and camera systems
Daycare equipment financing companies are partners that finance equipment like any other; each item is usually its own security. See equipment financing for the loan-or-lease question.
Illustrative arithmetic: a late subsidy month
Illustration only, not an offer: a center with 70 children receives about 40% of its revenue through a subsidy program that pays monthly in arrears. Monthly revenue is $105,000 and payroll is $68,000. If one subsidy payment of $42,000 arrives three weeks late, the center is short most of a payroll for those weeks. That is a working capital gap, repaid when the payment arrives.
Expansion and second centers
Opening a second center or adding an age group is a term loan question: build-out, equipment and the months of payroll before enrollment fills. Partners read enrollment history and waitlists at the existing center.
Child care in Johnson County, IA by the numbers
Johnson County, IA had 69 child day care employers in 2023 (NAICS 624410), paying about $21.9 million in annual payroll (U.S. Census Bureau, County Business Patterns 2023). Nonemployer Statistics 2024 counted 235 child day care businesses without paid employees (NAICS 2022 code 62441). Employer and nonemployer counts come from different programs and years. More county data is on the Iowa City, IA page.
Questions to settle before you ask
- What is enrollment by age group, and what is capacity?
- What share of revenue comes from programs that pay in arrears?
- Which payments arrive late most often, and by how long?
- Is there a waitlist, and for which ages?
- Which equipment is near the end of its life: vans, cribs, playground surfacing?
Centers that can answer these questions have more to show a partner.
Working capital versus a line for a center
If the gap comes from one late payment, a working capital loan repaid when it arrives is simplest. If program payments are always weeks behind payroll, a revolving line sized to that standing gap may suit better. Ask partners about both and compare total cost over a year.
By Larkpine Lending Group · Updated