Daycare Center Loans: Finding The Right Source Of Financing

The number of child day care centers in major Canadian cities such as Montreal, Toronto and Vancouver are expected to grow over the next decade. This is likely due to the increasing cost of living. Single parents are gradually being forced to find second jobs in order to keep the bills paid. Similarly, households with two parents are finding that both must find employment. This inevitably leads to a significant increase in the demand for child care. To meet the demand, entrepreneurs are starting day care centers. But, the investment and ongoing costs of running these businesses is large. Daycare center loans can provide working capital and a reliable source of cash flow to build revenue and profitability.

Financial Considerations For Operating A Day Care Center

It’s critical to have a keen grasp of what will make your day care center profitable. Most people who launch their businesses don’t consider the financial requirements of breaking even or making a profit. Without knowing these numbers, a child care business can easily fail. You’ll likely need at least 100 children enrolled in your facility to be profitable. In highly-populated cities like Toronto and Montreal, attracting this number should be easy. If you’re unable to find enough parents to enroll their children, you may have trouble servicing your daycare center loans.

Having The Flexibility To Expand

With a bit of marketing savvy, some child care business owners have cast an eye toward expansion. This can include operating several facilities throughout Canada or securing a daycare center loan to add space to an existing building. With a flexible source of financing for your child care operation, you can allocate the money in any way you wish. Unfortunately, conventional loans for day care centers don’t often allow this flexibility.

Canadian Lenders Pose A Challenge

Common sources of capital include banks and the Canada Small Business Financing Program. While both can provide access to the capital you need to continue or expand your business, they’re not without limitations. Often, these business loans will restrict your use of the capital. That is, they may not allow you to allocate the money toward certain expenditures. Even though you may be intimately familiar with how to operate a day care facility, your use of the funds can limited by what the bank considers important.

Also, most banks in Canada will conduct an exhaustive credit check before offering you a daycare center loan. This is done to measure your ability to manage money and repay debt obligations. Their hesitance to lend you money may be due to watching many child care businesses fail in major cities like Vancouver and Montreal. In effect, the failures of those who are unsuccessful with running a day care operation make your securing a loan more difficult.

Why A Business Cash Advance Makes Sense

Because securing a business loan for your daycare business can be challenging, a new form of flexible financing has been introduced to small business owners. Merchant cash advances offer more benefits to entrepreneurial companies than traditional loans. They’re more flexible because they allow those who run child care facilities to use the capital in any way they see fit. Plus, rather than requiring a fixed monthly payment that neglects fluctuating revenues, a business cash advance is serviced automatically by a predefined portion of credit card receipts.

Whether you’re starting your day care business as a tiny babysitting operation with plans to expand slowly or you’re launching a large venture immediately, flexible financing can play a key role in your success. Take a few moments to learn how a merchant cash advance can help. You can even use the funds to refinance your existing high-maintenance daycare center loans from your bank.

Are you currently accepting payments using credit or debit cards at your business? If so, we can probably help you find the money you need fast. Apply Now!