How to Get a Loan for Daycare With Bad Credit


If you want to start a daycare business but are discouraged by the potential effects of your bad credit, you should know that there are still ways to get a loan. Even if you have bad credit, there are certain lenders who can step in and help, even if they are not able to provide the best terms available. By getting a loan, you will have the potential to make money and rebuild your credit to improve your current situation. In order to get a loan for a daycare with bad credit, follow these steps.

Things You'll Need

  • Business plan and budget
  • Loan application
  • All applicable licenses

Improve your credit. Although you currently have bad credit, you can take proactive steps to improve your situation. Focus on saving money on an everyday basis and on paying your bills on time. If you don’t have a credit card account for yourself or for your daycare business, open one now to help establish a good credit history. Go to to find more tips on how to improve your credit. (See Resources for link.)

Get a partner. Even if your business is incorporated, a lender will want to look at your personal credit if the daycare has not been in operation for long. To improve your situation, have a friend or family member co-sign the loan with you or go into the daycare business with you as a partner. If they have good credit, it will improve your chances of getting a loan with good terms.

Register your company with Dunn & Bradstreet. A prospective lender will check your company’s credit profile with Dunn & Bradstreet (D&B), the leading business credit bureau. (See Resources for link.) To obtain your D&B number and start building your credit profile, you must register and pay a fee.

Create a business plan and budget. Write a business plan that shows your goals and five-year projections, as well as the amount of start-up capital needed. List your financial resources, including any personal loans to the company and any bank loans. Set a budget that allows you to achieve your projected goals while staying within the company’s projected means. Your lender will want to see both a business plan and a budget, not only to learn more about your daycare business and its finances, but also to ensure that you are thinking carefully through the finances and will not default on the loan.

Obtain all applicable licenses. You must have a license to operate a daycare, even if it is located in your own home. Some states will also require a background check. Visit to learn more about the requirements for licensing. (See Resources for link.)

Find lending quotes that are specific to your situation. Spend some time researching commercial lenders and their rates. You may need to look at lenders who specialize in giving loans to people with less than stellar credit, such as sub-prime lenders. Ask your lenders what kind of loan would be the most favorable for you. You can get quotes from multiple lenders at (See Resources for link.)

Apply online and close the loan. After deciding on a lender and the type of mortgage that will best fit your needs, complete your application online. You will want to act fast so that you can take advantage of the interest rate that you have been offered. If you wait too long, the interest rates may increase.

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