For people that live in small to large cities across the USA finding quality daycare can seem like a never ending quest. Perhaps for this reason daycares are in high demand, but so is the need for daycare financing to expand existing facilities or to upgrade or bring properties up to required standards.
As a prospective daycare owner or a person that has a daycare and wants to increase in size or add another location, finding daycare financing may prove to be more difficult than you imagine. This is because there are licensing requirements and other issues that are often required in addition to loan applications.
Your Credit Score
Typically most daycare financing is also going to require a complete evaluation of your current credit score and reports. These are available free of charge from the three credit reporting agencies, Experian, Equifax and TransUnion and it is a good idea to review these several months in advance of your application.
If you have any discrepancies on your reports you will need to go through the process to have them corrected. Again, this process is lengthy and may require months before the change is reflected on your score.
Since any lender, including the Small Business Administration, looks at owner credit management history before providing daycare financing this is a critical aspect.
Interest rates for daycare financing are going to hinge on several factors including your credit history and your available credit. This is also referred to as your debt to income ratio where creditors look carefully at how much you already owe compared to how much you earn.
By improving your credit score and paying off your outstanding debt you will qualify for lower interest rates through daycare financing. Other factors that can be factored into the rate you will be quoted include the amount of money that you are asking to borrow as well as the time that you need to return the loan in full.
Working with specialized lenders that provide daycare financing often provides the best interest rates. These lenders can help you apply for loans that require a low down payment if you are buying a facility as well as low closing costs and even flexible pre-pay options that can help reduce interest paid.