Understanding Child Care

How SBDCs & Other Financial Intermediaries Can Support Child Care

Business Development in California

The Building Child Care Project

Funded by the California Department of Education,Child Development Division, BCC is a collaboration offour organizations:

• The National Economic Development and Law Center

(NEDLC) • The California Child Care Resource and Referral

Network (CCCR&RN)• The Children’s Collabrium • The Low Income Investment Fund (LIIF)

BCC’s Mission

The Building Child Care (BCC) Project provides a centralized clearinghouse of information and services to increase the California child care sector's understanding of the facilities development process and access to facility development resources.

BCC’s Core Services

• The BCC Web Site: www.buildingchildcare.org

• The Toll Free Hotline: 1-888-411-3535

• Enhanced One-on-One Capital Financing TA

• Trainings (Providers and TA Intermediaries)

• Educating Policymakers and the Field

What is Child Care?

• Care and education outside traditional K-12 education for children of varying ages (0-12).

Family Child Care Homes Small (licensed for 8) and large (licensed for 14) family

child care homes with a family day care home license from Community Care Licensing.

Licensed child care centers      Private, for-profit and non-profit centers, Head Start centers, California Department of Education (CDE)-contracted

centers with full-time and/or part-time programs, and Licensed centers that define themselves as co-ops,

nursery schools, preschools and school age programs.  

There are Two Types of Licensed Child Care

California’s Licensed

Child Care Industry

Licensed Family Child Care Homes

Licensed Center-Based

Programs

Small Family Child Care

Homes (6-8 capacity)

Large Family Child Care

Homes (9-14 capacity)

Title 22 Centers Title V Centers

Head Start Early Head Start Migrant Head Start

CDE-CDD Funded Programs

(e.g., State Preschool, and General Child

Care, etc.)

Head Start Early Head Start Migrant Head Start

Child Care is Integral To Community Economic Development

CommunityEconomic

Development

• Safe place for children

• Gathering place for parents

• Builds skills, education and training for both

• Creates 132,000 jobs in CA

• Generates between $4.7 and $5.4 billion in gross receipts statewide

• Enables parents to work and local businesses to thrive

Child Care Creates Jobs

Child Care Direct Employment Compared with Other Industries in California, 1999

020406080

100120140160

Printing andPublishing

Licensed Child Care AccountingServices

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Child Care Creates Jobs

• Workforce includes about:– 130,000 people, predominantly female, statewide

• Caring for about*:– 750,000 children, statewide

• 250,000 in licensed family child care homes

• 500,000 in licensed infant/preschool centers

*Not including children in school-age only centers

Child Care Generates Revenue

Licensed Child Care Industry Revenues Compared with Other Industries in California, 1999

5.5 5.4

3.32.9

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2

3

4

5

6

Vegetables Licensed Child Care Women's Clothing Sporting Goods

U.S

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Child Care Supports Working Parents

• The child care industry enables parents to work and/or update their skills.

• More than half of children ages 0 to 5 in CA live in families where both parents work.

• Child care enables Californians to earn an estimated $13 billion annually.

High-Quality Child Care Cultivates the Future Workforce

• High-quality child care and early education programs lay the groundwork for CA’s future economic success by preparing the next generation with life and learning skills.

Child Care Supply in California

2005 Child Care Portfolio

• Estimated Demand

– 3,848,155 children with parents in the labor force

• Licensed child care Supply

– 1,002,400 licensed child care slots available

• Licensed child care is available for only 26% of children with parents in the labor force

• County level child care supply and demand information is available at: http://www.rrnetwork.org/our-research/2005Portfolio.html

The Child Care Sector’s Needs:

• Business Development– Business Plans– Bookkeeping– Contracts– Marketing– Rate setting– Taxes

• Access to Financing – Loan Packaging

Can SBDCs Work with Nonprofit Providers?

• SBDCs can provide trainings/one-on-one TA to nonprofit child care providers because the industry provides a significant economic impact (e.g., generating local jobs and revenue and enabling parents work and/or update their skills).

• Nonprofits can’t currently access SBA loans but there might be future policy changes that will eliminate that requirement.

Local Resources for SBDCs WorkingWith Child Care Providers

• Local Child Care Planning Councils (LPC) conduct needs assessments that are useful for determining market demand at the sub-county level. To find your local LPC vist:http://www.cde.ca.gov/sp/cd/re/lpccontacts.asp

• Resource and Referral (R&R) agencies can also provide data for estimating market demand. To find your local R&R visit: http://www.rrnetwork.org/resources-and-links/counties.html

• Amador, Calaveras, Kern, Los Angeles, Merced, Orange, Riverside, Santa Barbara, Solano, and Ventura Counties have ABCD Constructing Connections, a program that actively encourages the child care and community development sectors to work together to support and streamline the process of financing, constructing and managing child care facilities:,. For more information on ABCD Constructing Connections visit:http://www.buildingchildcare.org/LIIF ABCD C Conn-Operators_Final_.pdf

SBDCs Partner with Child Care Businesses & Intermediaries

Central Coast SBDC: • Partners with Santa Cruz credit union, El Pajaro

CDC, Santa Cruz Community Ventures, the Human Resources Agency & the County Office of Education Child Development Resource Center

• Provides:– Business training and 1-1 technical assistance for

child care operators and providers– Child care business operational and fiscal

analysis– Child care facilities pre-development

SBDCs Partner with Child Care Businesses & Intermediaries

Central Coast SBDC cont.: • Created an “economies of scale” project for CCC,

which reduces costs through bulk purchases (e.g., food, dental care).

• Helped develop an association of family child care home providers. The network exchanges information, shares best practices, etc.

SBDCs Partner with Child Care Businesses & Intermediaries

Southwestern College Small Business Development &International Trade Center (Chula Vista):• Received a HUD grant to develop a micro-enterprise

family childcare program• Partners with Family Resource Center• Offers12 week training (in Spanish) that combines a

business course with child development and health and safety curriculum

• Offers small business loans through ACCION

Effective Curriculum For Training Child Care Providers

• BCC’s Child Care Center and Family Child Care Home Facilities Development and Financing Manuals: http://www.buildingchildcare.org/publications. htm

• SBA’s How To Start A Quality Child Care Business:http://www.sba.gov/library/pubs/mp-29.doc

• LIIF’s Preparing Child Care Borrowers for Underwriting: (website coming)

• Fannie Mae Foundation Publications:http://www.homebuyingguide.org/products.asp?lang=a

• Redleaf Press’ Getting Started in the Business of Family Child Carehttp://www.redleafinstitute.org/pdf/gettingstarted.pdf

• Self Help’s Business Side of Child Care Manualhttp://www.self-help.org/business-and-nonprofit-loans/business-and-nonprofit-files/business-nonprofit-technical-assistance-resources/Business.Side.of.Child.Care.Manual.pdf

SBDC’s Can Help Grow and Sustain the Local Child Care Industry