If you’re starting a daycare service, the upfront cost can be very intimidating. It might be obvious that you would search for all means to help start your business. One such example would be looking for any sort of government grants and funding to help start your brand-new daycare service. And trust me, I’ve been there too!
Generally, there are numerous types of grants daycare owners can apply for through their state and local governments to get money. Daycare owners in the United States can expect to find grants offered through the USDA and other federal entities.
Additionally, there are numerous ways to go about applying for and receiving your money through the government.
The Different Types of Government Grants
There are numerous types of grants a new daycare owner can end up applying for, and they often depend on the purposes of the money you’re receiving. That means that you need to be aware of which grants you’re applying for and you should also know exactly what you’re going to be doing with the money!
Contact the Child Care Resource and Referral Agency
Depending on your location in the United States, you may have a nearby CCR&R (Child Care Resource and Referral) agency that can help you with funding the initial startup of your daycare. They will help you fund the renovation costs and the startup costs of your daycare. The specific dollar amounts of what you will receive vary greatly from state to state because of different costs of living and budgets. By visiting the HHS website, you can find a master list of the different Child Care and Development Fund administrators who will help you depending on the state that you are operating in.
Apply for food subsidies
In addition to helping subsidize startup costs, the federal government also helps subsidize costs of providing nutritious food in daycare centers. The USDA Child and Adult Care Food Program are where you would apply for this grant. This is extremely important if you want to offer extremely fresh foods that may be a lot more expensive than cheaper food items. I would recommend exploring this option, as nutritious food is not just a selling point for your daycare business but it’s also a great way to help your immediate community in getting your children the nutrients they need.
Head Start Program
Another way that you can receive funding and help for starting your daycare is through your state’s local Head Start program. This program is offered through the Department of Health and Human Services to set children up for school and their life. I highly recommend working with them as they are a fantastic help for any new daycare owner looking for some help funding.
Government Daycare Funding for Parents
Additionally, to funds for your own daycare, it may be helpful to let your clients know of funds and grants that they can take advantage of, too. The source of these funds ranges from the government to the military. Read along to find out more funds that your clients can use.
Without a doubt, this is one of the most important funding sources for parents who may not be able to afford quality daycare. For you as a business owner, you must make your clients aware of this, as not only can this ensure that your clients maintain their business relationship with you, but also that they maintain a stable career and that their child does not have to transfer to a different daycare center or be pulled out of one altogether.
There are several ways that you can let your clients know about these funds. One of the best resources is to check your state’s childcare assistance policy. They are funded through the Child Care and Development Block Grants, which are grants that can be used for many different purposes that states decide what to do with. The result of this is different states can provide different levels of aid depending on the cost of living as well as the cost of childcare in your state.
I highly recommend telling all your clients this regardless of income as this is an easy way to ensure you receive steady cashflow even in an extremely turbulent or volatile economic time.
Department of Defense
While there may not be a large population of serving military parents, they undoubtedly exist. That’s why members of the military are offered subsidies through the Department of Defense to help care for their children. It is recommended that your clients check with their branch to see what kind of subsidy they are eligible for. Like the kinds of state funds that these parents may receive, it’s important to make sure that you let them know of all kinds of subsidies, especially if your daycare is in an area that has many low-income residents that are in the military or otherwise.
School and Work
If your client is enrolled in school, whether that be high school, college, or similar, the clients’ states can provide help. If your client is in high school, it may be helpful to point them to your local CC&R to help them talk to the state’s childcare subsidy office. Additionally, if your client is working, some employers let their employees use some of their paychecks for the only reason of paying for childcare. This money can not be used for any other purpose in any circumstances, but this money is not taxed. As usual, tell your client to check with their human resources department to see what kinds of funds are eligible for them to be used for childcare.
Like with your daycare, your state’s head start program is extremely effective in helping provide funds to advance children’s development before school and in life. They have funds for parents of children who may not be able to afford childcare on their own. If this is the case, make sure that your clients know about the Head Start program. The amount that they receive again depends greatly on the state that you are operating in as well as the cost of living and many other types of factors.
Check out how you can start with government grants HERE!
Other means of securing revenue
There are other means of securing revenue to start up your business outside of the government, however.
Loans are the classic way of starting up your business. If you have reliable credit, and you are undoubtedly diligent in your finances, then this should be no problem applying for. The only issue is that when applying for a loan, you will eventually need to pay it back off. There is no way around this, so make sure that your business will eventually be profitable enough to pay this back.
Small business grants
Like other small businesses, daycares are eligible for small business grants. If you’re a brand new daycare owner, make sure to take advantage of these grants, as they can be extremely helpful in getting over the initial expensive startup costs. It’s also helpful in that these grants and subsidies do not need to be repaid, as their purpose is specifically set up to provide funding for the development of businesses.
However, there is a lengthy application process. This process can take an extreme amount of time, and it’s important to make sure you have everything together from your business plan to other types of business information before you apply for one of these grants.
Other federal grants
In some cases, the federal government will provide funding given that you are in a specific industry. Be sure to check the numerous different types of federal grants on grants.gov and other federal websites. This could be an extremely good and easy way to secure the initial funding for your daycare.
Are there other ways than from the government to secure funding?
Absolutely. There are numerous ways not listed in this article that may allow you to get the funding you need for your daycare. This can range from nonprofit organizations to investment firms that are looking to help their community. It all depends on what’s around you and in your state.
Can I use some of my own credit to pay to start my daycare?
It’s recommended that you request loans and credit through your business. This is because you may be personally liable for any expenses that you incur should your business end up closing. So, it is not recommended, but it can be done through a personal loan.
Are there types of grants that are funded because of my demographic?
Yes! There are numerous types of grants that are offered to business owners regardless if you are running a daycare depending on your race, ethnicity, gender, and other types of demographics. It’s recommended that you explore these different types of grants through the US Small Business Administration if you’re unsure about which you may or may not qualify for.
Please note: This blog post is for educational purposes only and does not constitute legal advice. Please consult a legal expert to address your specific needs.
To learn more on how to start your own daycare checkout my startup course and documents here.
Meet Shawn Chun: Entrepreneur and Childcare Business Fan.
I’m a happy individual who happens to be an entrepreneur. I have owned several types of businesses in my life from a coffee shop to an import and export business to an online review business plus a few more and now I create online daycare business resources for those interested in starting new ventures. It’s demanding work but I love it. I do it for those passionate about their business and their goals. That’s why when I meet a childcare business owner, I see myself. I know how hard the struggle is to retain clients, find good employees and keep the business growing all while trying to stay competitive.
That’s why I created Daycare Business Boss: I want to help childcare business owners like you build a thriving business that brings you endless joy and supports your ideal lifestyle.