By Jeff Rauth. Email Here or 248 885-8797. SBA Loan Officer at a Bank That Lends Nationally. 15 Years Commercial Real Estate Experience. Past Commercial Mortgage Broker.
Structuring a daycare center loan typically has a few challenges, including the special use nature of the property, and borrower/management experience. Due to these concerns and others, many lenders simply shy away from this building type.
SBA loans can be one of the better ways to finance daycare centers. First of all, borrowers can put down as little as 10% (90% loan to value) on purchases, compared to conventional financing at around 35 – 40% down.
Underwriting standards are less conservative, than on conventional loans, requiring less post close liquidity, experience and cash flow.
Conventional financing for daycare centers typically consist of a 3 to 10 year fixed rate with 20 to 25 year amortization schedules. Loan to values hover at approximately 65% and 60%. The costs are less with conventional loans than on SBA and the process is easier.