How to Get Funding to Buy a Childcare Franchise: SBA Loans for Starting a Franchise

Are you interested in learning how to get funding to buy a childcare franchise? Starting a childcare franchise like The Goddard School® is an exciting opportunity—but it also requires a thoughtful financing strategy.

For many aspiring franchisees, Small Business Administration (SBA) loans are typically the most popular and accessible path to funding.

In this guide, we’ll break down how SBA loans work, what they cover, the role a franchisor plays in helping you secure financing, and what to expect from loan terms and project types. We’ll also highlight an important 2026 rule change you need to know before applying.

What's an SBA Loan?

The U.S. Small Business Administration is a federal agency that supports small businesses by guaranteeing a portion of loans made by approved lenders.

This guarantee reduces risk for lenders, making it easier for entrepreneurs—especially first-time business owners—to secure financing.

In simple terms:

• A bank or financial institution issues the SBA loan
• This improves access to capital and often results in more favorable or flexible terms

For childcare franchise startups, common SBA loan programs include:

• SBA 7(a) (most widely used)
• SBA 504 / 504 Green
• Pari Passu (7(a) loan paired with a Conventional Loan from the same lender)

Next, let’s take a look at who qualifies for SBA lending in the United States.

New 2026 SBA Eligibility Rule

As of March 1, 2026, the SBA implemented an important eligibility update where applicants must be U.S. citizens to qualify for SBA-backed financing.

This change directly impacts prospective franchisees. If you previously relied on permanent residency or visa-based eligibility, you’ll need to reassess your financing options or ownership structure before applying.

Conventional financing might be an option but will most likely require a higher equity injection from the borrower.

How the Franchisor Supports Your Financing Journey

One of the biggest advantages of investing in a franchise like The Goddard School is the structured support system, especially when it comes to financing.

The franchisor plays an active role in helping you navigate the SBA lending process by:

• Explaining the loan process
• Consulting your specific needs
• Providing preferred lender references and financial templates
• Preparing detailed cost estimates for projects
• Acting as a liaison between you and your lender as needed
• Reviewing Proposal Letters, Commitment letters and Loan Structures
• Supporting you through loan closing

At The Goddard School, we also work to ensure you understand key concepts like equity injection requirements, debt service expectations, personal guarantees, and collateral obligations.

This level of involvement can streamline the approval process and help you present a stronger, more complete loan application.

What SBA Loans Cover for Childcare Franchises

SBA loans for childcare franchises typically cover a comprehensive range of startup costs, including:

• Franchise fees
• Construction or build-out costs
• Furniture, fixtures, and equipment
• Pre-opening expenses
• Working capital (often including $275,000 or more)
• Lender related fees and construction contingency and interest reserves, if applicable

Depending on your project scope, total investment levels can vary significantly.

Estimated Total Investment for a Goddard School Franchise

Understanding your total investment is a critical step in planning your financing strategy. For example, the total cost to open a Goddard School varies significantly based on how you choose to develop your location—whether you lease (build-to-suit), retrofit, or build from the ground up.

Below is a breakdown of the estimated investment ranges for a Goddard School based on the most common development paths.

1. Leasing a Facility (Build-to-Suit Lease)

In a build-to-suit (BTS) lease, a landlord or developer constructs the childcare facility to your brand’s specifications, and you lease the completed building.

• Total Investment: $1,003,500 to $1,503,000

2. Leasing and Retrofitting an Existing Building (Retrofit Lease)

If you lease a building that requires renovation or build-out:

• Total Investment: $1,736,500 to $5,032,000

This option offers flexibility in site selection. Costs can vary widely depending on the extent of construction required and the allocation of costs between the developer and tenant.

3. Purchasing Land and Building a New School

If you purchase land and construct a new facility:

• Total Investment: $5,493,500 to $8,908,000

While this path typically requires the highest upfront investment, it provides long-term ownership of real estate.

These investment ranges align closely with typical SBA loan structures. Keep in mind:

• Most projects require 10%–15% equity injection
• SBA loans can cover the majority of total project costs including construction, leasehold improvements, and working capital
• Loan terms and amortization periods vary depending on whether you’re leasing or building

By understanding your total investment upfront, you can better structure your SBA loan, determine your required equity injection, and choose the development path that aligns with your financial goals.

Source: Goddard Franchisor, LLC 2026 Franchise Disclosure Document

Why Lenders Trust The Goddard School

The Goddard School stands out in the childcare franchise space with an exceptionally low 0.3% SBA loan default rate. We also provide an annual Bank Credit Report that lenders rely on when evaluating financing opportunities.

For the last four years, The Goddard School has earned an industry-leading FUND score of 930 out of 950. The FUND Score is a franchise credit risk scoring system that provides lenders with an objective, data-driven evaluation of a franchise brand’s creditworthiness.

Franchise brands that excel in these areas make it easier for lenders to confidently say, “Yes.” According to FRANdata, banks collectively representing over $5 trillion in assets trust the FUND scoring system as an integral part of their franchise lending programs.

Check Out These Additional Resources

Funding a childcare franchise is a major milestone—and SBA loans can make that dream achievable. With structured terms, lower upfront capital requirements, and strong franchisor support, they remain the most popular path to ownership.

By understanding how SBA loans work, preparing for the financial commitment, and leveraging the guidance of your franchisor, you’ll be well-positioned to take the next step toward opening your own school.

Here are some additional online resources you may like to check out:

• Reasons to Invest in The Goddard School
• A Day in the Life of a Goddard School Franchise Owner
• Top Markets for Goddard School Locations

If you’re ready to begin your franchising journey with The Goddard School, click here to submit your information and a member of our team will be in touch.