How to Get Funding to Open a Daycare When You're Starting From Zero
Childcare is one of the few businesses where demand rarely dries up, which is why so many people look at opening a daycare as a first business. The catch is that licensing, insurance, and setup costs arrive before your first enrolled family pays you anything.
This guide covers what it realistically costs to start, which funding options fit a daycare with no revenue yet, and what lenders and grant programs want to see. It is general information, not financial advice, and every lender and program sets its own rules.
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Check my funding optionsWhat it actually costs to open a daycare
Costs vary widely by state and by format. A home-based daycare is the lowest-cost path: licensing fees, liability insurance, safety equipment, cribs and mats, and basic learning supplies. A commercial center multiplies all of that with rent, renovations to meet code, and staff payroll before opening day.
Before looking for funding, price out your own state's licensing requirements. Most states publish a checklist of what your space must have. That checklist is also your shopping list, and it keeps your funding ask grounded in real numbers instead of guesses.
Why "no money" changes the funding picture
Most lenders want to see that you have something at stake, even if it is small. A borrower with zero savings, zero revenue, and no collateral is the hardest file to fund. That does not make it impossible, but it narrows the field to lenders and programs built for exactly this situation. For the full picture on borrowing before you have sales, see Business Funding With No Revenue History.
Starting as a home daycare instead of a center is the single biggest lever you have. It cuts the amount you need to borrow, which makes every option below more realistic.
Funding options that fit a daycare startup
Start home-based to shrink the ask
Many successful centers began as licensed home daycares. The lower startup cost means you may only need a few thousand dollars for licensing, insurance, and equipment, an amount that is far easier to fund than a commercial buildout. You can expand into a center once enrollment revenue exists.
SBA microloans and community lenders
SBA microloans go up to $50,000 and are designed for startups that cannot get bank loans yet. They come through nonprofit community lenders, and many of those lenders offer business training alongside the money. CDFIs work similarly and often serve first-time owners. Expect a slower process and a close look at your business plan.
Childcare grants
Grants for childcare exist at the federal, state, and local level, plus some from foundations. They are real, but they are competitive, slow, and often restricted to specific purposes like serving low-income families or opening in underserved areas. Treat grants as one thread to pull, not the whole plan. Never pay anyone who promises to "get you" a grant for an upfront fee.
Borrowing against what you already have
Some owners start with personal savings, a low-limit business credit card for equipment, or help from family. If family money is involved, write down the terms even when it feels awkward. Mixing handshake loans with a new business is how relationships get strained.
Online lenders once revenue starts
Once children are enrolled and tuition is coming in, online lenders become an option for expansion: more space, more staff, better equipment. They decide mostly on bank statements and revenue, but they cost more than SBA or community options.
What lenders and grant programs want to see
- A simple business plan: what you will charge, how many children you need enrolled to break even, and what your monthly costs look like.
- Licensing progress: many funders want proof you are licensed or well along in the process, not just thinking about it.
- Your background: childcare experience, certifications like CPR and first aid, and any early-childhood training strengthen your file.
- A separate business bank account: even before revenue, it shows you are running this as a business.
Realistic steps before you apply
- Get your state's licensing checklist and price every item on it.
- Decide home-based or center, and be honest about which one your funding can support.
- Write a one-page business plan with your rates, capacity, and monthly costs.
- Open a dedicated business bank account.
- Apply to community lenders and grant programs first, since they are built for startups. Keep records of every application and deadline.
Watch out for funding traps
New owners are targets. Be cautious of anyone who guarantees a grant or a loan approval for an upfront fee, companies selling expensive "daycare in a box" packages on financing with unclear terms, and lenders who will not put the total cost in writing. A legitimate funder explains the full cost and gives you time to review.
The bottom line
Opening a daycare with no money usually means starting smaller than you imagined, often home-based, and funding it through community lenders, microloans, or grants rather than a bank. Get licensed, know your real costs, and borrow only what the business plan supports.
Related guides
This guide is general education, not financial, legal, or tax advice. AJV Ventures LLC is not a lender. Lender requirements vary, so confirm terms directly with any lender before you apply.