How Childcare and Healthcare Businesses Secure Funding

Running a childcare center, therapy practice, or healthcare-related business is so much more than a job. Helping people and families is a calling. You are shaping brighter futures, caring for families, and building healthier communities. Of course, behind the joy and impact of your work comes a unique set of challenges. Meeting strict regulations and keeping your facility running smoothly isn't cheap or easy, and the costs of doing things right can add up quickly.

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Ready to grow? Discover how to fund your childcare or healthcare business dream.

You might be dreaming of opening a daycare center, renovating your clinic, or upgrading to more advanced equipment. Maybe it's time to expand your business and bring your much-needed services to more families in your community. Whatever your vision looks like, the right small business funding can help make it possible.

Quick Links

Why Childcare and Healthcare Businesses Need Funding
Preparing to Apply: How to Organize Your Loan Documents
Key Financial Terms to Know When Talking with a Lender
Strengthening Your Loan Application
Alternative and Complementary Funding Sources
Frequently Asked Questions
Build, Grow, and Thrive with the Right Loan

In this guide, we’ll explore the most common funding needs for childcare and healthcare businesses. We’ll also walk through how to organize your loan application documents and break down key financial terms. The more you learn, the more confident and prepared you’ll feel. Keep reading and get ready to grow your healthcare or childcare business!

Why Childcare and Healthcare Businesses Need Funding

Childcare and healthcare businesses share similarities: both are people-centered, highly regulated, and essential to community health and well-being. They also face rising costs through compliance with safety standards, staffing requirements, and the need to invest in high-quality facilities and tools.

Here are some of their most common funding needs:

Start-up costs: licenses, initial facility leases, permits, training, and essential equipment

Operational improvements: outdoor play structures, upgraded medical devices, safety systems, or software to manage scheduling and billing

Expansion projects: hiring additional staff, renovating or adding classrooms, opening a second location, or increasing clinic hours

Technology investments: electronic record systems, learning management systems, telehealth platforms, or educational software

In many cases, these improvements drive long-term revenue growth. The upfront costs, however, can be steep. This is where a small business loan can bridge the gap.

Preparing to Apply: How to Organize Your Loan Documents

Applying for a business loan can feel overwhelming. Preparation is half the battle. Having your documents ready makes the process smoother and demonstrates to lenders that your business is stable and ready to grow.

Loan Application Document Checklist

Business plan: outlines your services, market demand, staffing, and financial projections; shows lenders you have a roadmap
Financial statements:
- Profit & Loss Statement (P&L) to show income and expenses
- Balance Sheet for assets and liabilities
- Cash Flow Statement to highlight incoming and outgoing money
Licenses and certifications: state childcare licenses, health permits, professional credentials
Business bank statements: proof of how your business manages money
Tax returns: both personal and business, often required
Collateral documentation: information about equipment, vehicles, or property you could use to secure the loan, if needed

💡Pro Tip:  Keep everything stored both digitally (PDF folders) and physically (binder format) for quick access. Lenders appreciate when applicants are prepared and organized, and it can make your application process faster.

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Key Financial Terms to Know When Talking with a Lender

Financial language can feel intimidating. Having a working knowledge of these terms can make conversations with lenders easier and build your confidence as a business owner.

Financial Terms to Know

Collateral:  Assets that are designated to secure the loan. For example: a building, vehicle, or valuable equipment.
Cash flow: The movement of money into and out of your business. This is especially important for industries with cyclical or schedule-bound payments.
Profit and loss (P&L): A document that tracks how much money your business earned and spent in a set time.
Debt-to-income ratio (DTI): How much of your income already goes toward paying debts. This figure is used to evaluate repayment capacity.
Equity: This is the portion of your business or asset that you own outright after subtracting liabilities.
Line of credit: Pre-approved funds you can borrow as needed, up to a set limit, and only pay interest on what you use.

📍Remember:  Lenders do not expect perfection. They do expect business owners to understand their numbers. Even basic familiarity sets you apart as a thoughtful borrower.

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Strengthening Your Loan Application

Before you submit your application, take time to make your financial story stronger. Here’s how:

Streamline Your Loan Application

Know your numbers: Review your profitability and cash flow trends monthly.
Build business credit: Even small vendor accounts in your business name can improve credit history.
Seek guidance early: Community development financial institutions (CDFIs), like DreamSpring, exist to support small business owners through financing and technical assistance. Many provide technical assistance to help you learn, plan, and achieve your business goals.

Alternative and Complementary Funding Sources

In addition to small business loans from a traditional bank, you may want to explore:

Types of Business Funding

CDFI financing: Purpose-driven funding that focuses on underserved communities.
Childcare facility grants: Some states and municipalities offer special programs to improve daycare access.
Healthcare and wellness microloans: Tailored to smaller, short-term investments in specialized equipment.
Small Business Administration (SBA) loans: If your business meets requirements, these may be an option for larger expansions.

Many small businesses combine funding sources. For example, a childcare provider might use a grant for playground upgrades, a loan for classroom renovations, and a line of credit to cover cash reserves for staffing.

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Frequently Asked Questions

Q: What documents do I need for a childcare or healthcare business loan?

You will typically need financial statements, tax returns, and bank statements. Some lenders may request collateral information, and your licensure and a business plan may be required for some loan products. You can see which documents DreamSpring requires here.

Q: Can I use a loan for renovations?

Yes. Loans often cover facility improvements such as classroom additions, clinic renovations, or safety upgrades.

Q: What if my business credit is limited?

CDFIs may be a good fit since they often work with newer or growing businesses without long credit histories.

Build, Grow, and Thrive with the Right Loan

Great childcare and healthcare businesses build strong communities. If your dream is to expand, modernize, or open your doors for the first time, financing can give you the tools to get there.

Start your funding journey with confidence by  organizing your documents, understanding key financial terms, and choosing the right lender.

At DreamSpring, we specialize in supporting small businesses like yours. Our personalized loans are designed for growth, combined with guidance on the application process, and a commitment to helping your vision thrive.