Real estate financing for child care centers: a cooperative effort of banks and state programs

Child care has become an increasingly important requirement for workforce readiness across the US. Funds to acquire and renovate the needed facilities are not readily available from commercial banking sources. To meet the growing need for child care, states have begun to fill the gap by providing incentives in the form of direct loans at low interest rates and loan guarantees to attract private sector lenders. Participation of conventional commercial bank lenders is a requirement of state programs. Child care programs from New York and Maryland are some of the most active in the US and have been used successfully for the acquisition, construction, and renovation of child care facilities in cooperation with bank lenders. Toddlers, a for-profit corporation, began operations in leased space in the Rochester area. With the participation of the New York Job Development Authority through a loan guarantee, a local bank will provide a loan of $360,000 to fund a $450,000 project to purchase land and build a larger center to service the needs of local corporations such as Xerox Corp.