Child Care Centers

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 61,800 child care centers in the US provide care for infants and children, and offer services out of dedicated facilities (private centers) or residences (home-based centers). Most child care centers are small, independent operations – 79% have a single location and 78% employ less than 20 workers.

Potential for Liability 

Providing care for children is a high stakes operation, where even small accidents and errors can have severe consequences.

High Turnover 

Finding and retaining permanent staff is a problem for the child care industry due to low wages, lack of benefits, long hours, and challenging work.

Industry size & Structure

A typical child care center operates out of a single location, employs 14 workers, and generates about $777,000 annually.

    • The child care center industry consists of about 61,800 companies, employs about 869,000 workers and generates about $48 billion annually.
    • Child care centers include nursery schools and pre-schools.
    • Most child care centers are small, independent operations - 79% have a single location and 78% employ less than 20 workers.
    • Pre-school age children of working parents average 36 hours of care from child care providers per week.
    • Unlike other educational service providers, accreditation is not critical to operations: Less than 10% of child care centers are accredited.
    • Large companies include KinderCare Education, Learning Care Group (La Petite Academy, Childtime, Tutor Time, Montessori Unlimited, The Children's Courtyard), and Bright Horizons Family Solutions.
                                Industry Forecast
                                Child Care Centers Industry Growth

                                Coronavirus Update

                                Oct 2, 2021 - Forgiveness Portal Proves Popular
                                • The Small Business Administration’s (SBA) Paycheck Protection Program (PPP) Loan Forgiveness Portal has accepted one million applications in less than two months since opening. This comes out to over $17 billion of relief money for more than one million of the smallest businesses in the US. Small-business owners who received taxpayer-subsidized PPP loans of $150,000 or less during the coronavirus pandemic can seek forgiveness directly with the government through the online portal that was opened on August 4, allowing them to sidestep the private financial institutions that ran most aspects of the program for 14 months.
                                • Over five million businesses with loans under $150,000 still haven’t submitted their 2021 PPP loan forgiveness applications, according to SBA Administrator Isabella Casillas Guzman. This is not the case for 2020 PPP applicants, as 91% of all loans eligible for direct forgiveness have been submitted.
                                • Demand for child care remains uncertain due to continually changing return-to-workplace plans. Advertising and technology firm Google, for example, announced in August another delay in its return-to-office plan, pushing its reopening date to January 2022. Google planned its return for October, which was a delay from September, which was a delay from July 2021. Companies including Apple, Amazon, Facebook, and Starbucks already announced postponements with similar timelines, and more employers are expected to follow if delta variant continues spreading throughout much of the country.
                                • Small-business owners who received taxpayer-subsidized Paycheck Protection Program (PPP) loans of $150,000 or less during the coronavirus pandemic can seek forgiveness directly with the government through an online portal that was opened on August 4, allowing them to sidestep the private financial institutions that ran most aspects of the program for 14 months.
                                • Some businesses that took PPP loans in 2020 but don't apply for forgiveness soon will need to start making payments on the loan plus interest. The PPP loans will automatically convert to a standard loan at 1% interest if a small business does not apply to the SBA for forgiveness within 10 months of the end of the covered period under which they had to spend the money. For some businesses that received a loan when the PPP launched in April 2020, there was an eight-week covered period, which would put the forgiveness application deadline in the middle of July. For most loans operating under the more popular 24-week covered period, that meant a deadline in September.
                                • The SBA stopped accepting PPP loan guarantee applications on May 31. About 96% of PPP loans made in 2021 went to small businesses with fewer than 20 employees, according to the SBA. The SBA said that it has approved roughly 3.3 million PPP loan forgiveness applications as of late May. That means that roughly 69.5% of the more than 5.2 million PPP loans made in 2020 have been forgiven in whole or in part, according to SBA data. About $69.2 billion in loans over $1 million are “in process,” compared to about $12.3 billion for loans under that amount, suggesting that some larger PPP borrowers are not faring as well in the forgiveness process.
                                • Small business owners seeking funding from the SBA can apply to the Economic Injury Disaster Loan program, the Targeted EIDL Advance grant program, the Supplemental EIDL Advance grant program, and the Debt Relief program.e than $14,000, according to Center for American Progress data analyzed by online lending marketplace LendingTree. “So much more is being required of these centers during the pandemic, and these new, tougher safety guidelines from governmental agencies have forced them to ramp up their spending in order to comply,” said Matt Schulz, LendingTree’s chief credit analyst. Annual costs at center-based care providers for children ages 3 and 4 have increased 57% during the pandemic. Annual costs at center-based care providers for infants and toddlers (children 2 and younger) are up 37%.
                                • Child care expenses have spiked by more than 40% during the pandemic, soaring from nearly $10,000 annually per child to more than $14,000, according to Center for American Progress data analyzed by online lending marketplace LendingTree. “So much more is being required of these centers during the pandemic, and these new, tougher safety guidelines from governmental agencies have forced them to ramp up their spending in order to comply,” said Matt Schulz, LendingTree’s chief credit analyst. Annual costs at center-based care providers for children ages 3 and 4 have increased 57% during the pandemic. Annual costs at center-based care providers for infants and toddlers (children 2 and younger) are up 37%.
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