What Do I Need To Buy A Childcare Company? 

You need four basic items to buy a childcare company or school.

1. Your credit score.
2. Your occupational background.
3. Whether or not you’re buying real estate with the business.
4. The type of financing and lender you choose to make the loan.

First, your credit score in this market needs to be 700 or better. In some cases, your score can be in the high 600s as long as there is a good reason for it, but ideally you and any partners need to have scores that will average out around 700 or more.

Second, your occupational background speaks to your strength as an owner or operator. This is certainly important to the bank looking to be repaid, but contrary to some public perception, it is not always necessary to have a background in education. I have seen buyers become wonderfully successful in our industry after careers in non-education sectors.

Third, the SBA changed their lending parameters in January 2018 so buyers can purchase companies (business and real estate) with a 10% down payment. SBA lenders no longer require a 25% down payment for the business component. Assuming you are using an SBA loan, the term of your loan will be a weighted average of the business component term (10 years) and the real estate term (25 years).

Fourth, the bank or lender you choose to make the loan can have a considerable impact on the cost of your loan. Costs include the amount of cash you have to use for a down payment as well as your interest rate, points on your loan, the amount of time it takes the bank to close… etc. The best defense against an overpriced loan is to make the banks compete with each other. Don’t be afraid to let the banks know that they are competing for your loan. Banking is an extremely competitive business. Don’t settle for talking with your local banker. BFS® works with more than 60 major banks for this very reason. To learn more see https://bfsinc.net/financing/. Remember, a quarter-point difference in interest rates means a lot of money to you over the term of your loan. While there are certainly other factors that will affect the approval of your loan, covering these items successfully will take you most of the distance.

I hope you find this information helpful. If you need more information related to financing your business acquisition, don’t hesitate to call us at 800-467-1774.

BFS® is the Largest Non-Governmental Provider of FREE Resources to the Early Education Industry. If you have questions on a topic, watch a quick video by going to our YouTube Channel or access information by clicking on the Instant Q & A tab at the top of this page.

Our new book  How 1000s of Childcare Centers and Schools Are Making Millions is now available in hardback, Kindle, and Nook so you and your directors can reference the information whenever and wherever you need it. All profits from every book sold go to St. Jude Children’s Research Hospital. This is a great way for you to give to St Jude Children’s Research Hospital and get this great resource as a bonus for yourself, your staff, and your company. Click Here to order your copy today..

(Legal Disclaimer:  Always consult the proper professionals before taking action.  By and before the use of the information provided herein, reader agrees that BFS® is not responsible for viewer’s actions related to said information.)