Preparing a budget gives you a picture of whether your projected income will meet your expected expenses. The following resources can help you prepare a budget for a child care business:

  • Center Cash Flow Projection Worksheet
    This worksheet helps you project how much cash you expect to come into your business compared to how much cash you expect to go out of the business.
    By First Children’s Finance
  • Sources and Uses Worksheet: Child Care Center
    This worksheet helps child care centers identify possible sources for funds and the planned uses for specific funds.
    By First Children’s Finance
  • Developing a Financial Management Plan” in How to Start a Quality Child Care Business
    This document has worksheets for a start-up budget for a child care business, an operating budget and tracking monthly operating expenses.
    By the U.S. Small Business Administration

Funding Opportunities: Grants and Loans

When preparing a budget for a child care business, you must know how much money you need and how you’ll earn or acquire money to cover those costs. Your business plan will help you define how much money you need to start your business. You can then apply for grants and loans to help you get started. The government, commercial banks and credit unions are common sources of loans. Loans require you to pay interest on the amount borrowed. In most situations, you are asked to show you have additional sources of money to back up the loan request. Grants are given without an expectation of repayment. Loans are more common than grants for start-up funding.

Some local businesses offer financial incentives to child care businesses as a strategy to support employee retention by making child care more readily available. In some communities, family child care providers can seek economic support for home improvements.

Federal agencies that have information about grants and loans

  • Grants.gov has information about more than 1,000 federal grant programs involving 26 federal grant-making agencies. Information on the site can guide you through the process of applying for federal funds.
  • GovLoans.gov has government loan information.
  • U.S. Small Business Administration offers a wide variety of loan programs. Minority-owned businesses and women-owned businesses sometimes receive priority over other applicants.

The most common federal sources of funding that help child care programs

  • The Child and Adult Care Food Program (CACFP) is a food cost reimbursement program. Guidelines for how to enroll in this program are on the Web.
  • Child Care and Development Block Grant (CCDBG) is a federally funded grant to states to support child care subsidies. Many states offer providers funding assistance through CCDBG. A listing of state agencies is on the Office of Child Care website.

Nonprofit organizations that have information about loans and grants

The following is a sample of the many organizations that can help you with information about loans and grants.

  • Foundation Grants to Individuals Online is a nonprofit service organization that offers an online listing of grants to individuals in the United States.
  • First Children’s Finance (FCF) provides financing tools and resources for making a business plan to child care centers and family child care providers. It provides loans to new child care centers and family child care providers in selected areas. It also supports expansion, quality improvements and operations of existing programs.

Small businesses

A small business is a privately owned and operated business. Small businesses have a relatively small number of employees for their field. One type of small business is a microenterprise. A microenterprise has five or fewer employees and requires initial capital of $35,000 or less. Many small child care programs fall into this category. Microenterprises and other small businesses may look for microloans to help them fund their new venture. Microloans are smaller sums of money (usually in the tens of thousands) lent to new small businesses. These are usually used for start-up funds.

The U.S. Small Business Administration (SBA) has a Microloan Program. This program provides funds to non-profit, community-based organizations (called intermediaries) to offer microloans. You can learn more about SBA’s Microloan Program and get a list of intermediaries in your state. More information about Loans and Grants is also available on SBA.gov.

Grant writing resource

For information on grant-writing, see Tips for Writing Grant Proposals from the Division of Grants, U.S. Department of Health and Human Services.

Taxes

As a small business, you will be responsible for filing business income tax information with local, state and federal agencies and for paying various other taxes that may be required. Taxes should be a part of any budget for a child care business.

Your state revenue department has information about state tax laws. The Internal Revenue Service (IRS) has information about which federal taxes apply to your business. For additional information, you may want to consult a tax lawyer. Your local Child Care Resource and Referral (CCR&R) agency may also have information about who you can contact.

Family child care providers can take advantage of tax benefits and employment benefits.

  • Home business tax write-offs help to offset expenses.
  • Direct expenses such as food, toys, equipment and insurance are 100 percent tax-deductible.
  • Indirect expenses such as real estate taxes, mortgage interest, rent, utilities, repairs and home insurance are partially tax-deductible.
  • If you pay self-employment taxes, you will be eligible for Social Security retirement income and Medicare health insurance.

Additional Resources

Additional Financing Information from First Children’s Finance