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:

  • 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, an operating budget and tracking monthly operating expenses.
    By the U.S. Small Business Administration

Funding Opportunities: Grants and Loans

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

  • 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.
  • 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.

Microenterprises – small businesses

If you are a small child care business with five or fewer employees that requires initial capital of $35,000 or less, you are a microenterprise. There are organizations (intermediaries) that offer services and loans to help you reach economic self-sufficiency.

Child Care Microenterprise Resource Guide has information about the following topics:

  • Starting or improving a child care business
  • Accessing funding opportunities
  • Improving physical business infrastructure

The guide also has a directory with more than 60 organizations in 34 states, the District of Columbia, and Puerto Rico that have experience serving child care providers and business owners.

From the Office of Child Care, U.S. Department of Health and Human Services

Sample grant writing


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.

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.

Family child care providers can also be helpful to parents by keeping current with the Child Care and Dependent Tax Credit information and providing the information and resources to them. If a parent paid someone to care for a child, they may be able to reduce their tax by claiming the Child and Dependent Care Credit on their federal income tax return. The IRS published tax tips titled “Top Ten Facts About the Child and Dependent Care Credit” (IRS Tax Tip 2009-46), nine of which apply to parents whose children receive care in a home other than their own. You may want to print the excerpted information that follows and provide it as a hand-out to parents when providing them with other informational materials.

  1. The care must have been provided for one or more qualifying persons. A qualifying person is your dependent child under age 13. You must identify each qualifying person on your tax return.
  2. The care must have been provided so you – and your spouse if you are married – could work or look for work.
  3. You – and your spouse if you are married – must have earned income from wages, salaries, tips, other taxable employee compensation or net earnings from self-employment. One spouse may be considered as having earned income if they were a full-time student or they were physically or mentally unable to care for themselves.
  4. The payments for care cannot be paid to your spouse, to someone you can claim as your dependent on your return or to your child who is under age 19, even if he or she is not your dependent. You must identify the care provider on your tax return.
  5. Your filing status must be single, married filing jointly, head of household or qualifying widow(er) with a dependent child.
  6. The qualifying person must have lived with you for more than half of the tax year.
  7. The credit can be up to 35 percent of your qualifying expenses, depending upon your income.
  8. You may use up to $3,000 of the expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals.
  9. The qualifying expenses must be reduced by the amount of any dependent care benefits provided by your employer that you can exclude from your income.

You may also refer parents to the resources listed below, one of which is the IRS Ten Tax Tips in its entirety and which also provides links to required tax forms.

Additional Resources

Additional Financing Information from First Children’s Finance