How to Start a Daycare Center with Government Grants

How to start a daycare center with government grants? Maybe you have a big passion for serving kids and families. That is why you have the plan to start and open a daycare center.

However, opening a daycare center is quite steep. You need to spend about $10,000 to $50,000 USD. Before you reach your saving, you can find the available government grants.

In this post, you will get some tips on how to start a daycare center with government grants. Besides, you will get some information about the available funds if you want to have a non-profit or for-profit daycare center.


How to Start a Daycare Center with Government Grants

Starting a daycare center with government grants is beneficial to solve the expensive venture. Therefore, you can take your time to do some research for the available grants, determine eligibility, and have a strong plan for the grant application.

Besides, you need to secure the funding you need to open your daycare center and offer quality care for children in your area.

Do Market Research

Market research is the crucial step in opening a daycare center. By taking your time to research the market, you can make sure that the daycare center is profitable.

To do the market research, here are the following things to know:

  • Identify the target market: Before starting the research, identify the target market of your daycare center. It can be families with children, working parents, or others in a certain income bracket.
  • Do a SWOT analysis: SWOT (Strengths, Weaknesses, Opportunities, and Threats) of the daycare center can support you identify communities and places for improvements and what makes you stand out among the competitors.
  • Analyze local market trends: Spend your time in your area to find the local market trends before starting your daycare centers. Do research about the available daycare centers in the sizes, areas, available services, and costs.
  • Research the competitors: You can research the competitors, including the offered services, the costs, the strengths, and the weaknesses.
  • Look at the industry statistics: It is important to get a better understanding of the daycare industry available in the USA. Therefore, you need to do some research on industry statistics and trends. Check out the available data on daycare enrollment, the average length of time children goes to the daycare and the costs.
  • Collect feedback from customers: You can do an effective method to gather feedback from parents and other customers. For example, you can start surveying to determine what you are looking for in a daycare center.
  • Use available online resources: There are many available online resources to help you collect information and do some market research. For example, use websites like the National Association for the Education of Young Children, the Census Bureau, and the Bureau of Labor Statistics can offer valuable information about the daycare industry.

Who is the Target Market?

When you want to open a daycare center, the target market can be different, based on the offered services, location, and the age of the children as the customers. Generally, the target markets for the daycare centers are below:

  • Working parents: Parents or single parents who work at the office or other locations outside the home need a trusted place for their children so they can stay during working hours.
  • New Parents: Parents with young children need daycare services for the transition after work.
  • School-Age Children: After-school care is available as one of the services in a daycare center. During the care services, they can help to do the homework, do extracurricular activities, and provide snacks.
  • Special Needs Children: Some daycare centers provide special care for children with special needs or with disabilities.

Profit or Non-profitable Business?

We can easily say that the daycare center is a profitable business. However, whether it is a profitable business, depends on some factors including the competitors, the target market, the location, the service quality, and the management.

Therefore, you need to take your time to conduct market research properly. Also, make sure that you have strong financial planning to determine the profitability of this business.

To answer your question about how to start a daycare center with government grants, make sure that you start this business as a non-profit organization. Mostly, the government grants are for 501(c) or non-profit centers.

By establishing this type of business, you have more opportunities to get federal, state, and private grants. Meanwhile, if you want to establish your business as a for-profit center, you will get fewer grants but you can apply to MBDA, SBIR, or other organizations.

Daycare Center Niches

Make sure that you have an existing niche to focus on. For example, you can open a daycare center for children under four years old, a daycare center for adults, or a daycare center for disabled children.


Starting a daycare center also means that you should know who the major competitors of your business are. It can be other daycare centers, nannies, babysitting services, preschools, or in-home daycare providers. The competition level can be different, depending on the location and the target market of your daycare center.

Country and State Regulations in the US

Of course, there are regulations and zoning laws in the United States you should know before starting a daycare center business. The regulations and laws are commonly different, depending on each state. Typically, it covers building requirements, health and safety standards, and the ratio of staff.

It is essential for you to familiarize yourself with the specific requirements and laws to open a daycare center in your state and county. This way will prevent you from getting compliance or penalties.

To get Child Care Center License, you must attend an orientation and review the laws and regulations in your state. Also, you need to complete an application packet.

Once submitted your packet and paid the relevant licensing cost, the Child Care Licensing Program in your state will review the materials so they will give you a license if you have met all the regulations.

To get everything easier, call the local Regional Office in your state to get an orientation schedule. Alternatively, take classes about relevant education to strengthen your knowledge to start a daycare center. You can learn the details about the grant proposals.

Franchise for Daycare Business

When you start opening a daycare business, there are some opportunities to start franchising as well, as below:

  • Bright Horizons Family Solutions
  • Children’s Lighthouse Learning Centers
  • Kids R Kids
  • La Petite Academy
  • Learning Care Group
  • The Children’s Courtyard
  • Tutor Time Child Care/Learning Centers
  • The Goddard School
  • Primrose Schools

Things to Have to Open a Daycare Center Business

If you are ready to open a daycare center business, first, make sure that you have the following things:

  • Business Plan: A detailed plan about your business is very important to secure funding and outline the goals and strategy of your daycare center.
  • Licensing and Permits: Make sure that you can meet the regulations about licenses and permits to get from the state and the local government.
  • Location: Make sure that the location is appropriate with sufficient space for the daycare center. It is essential to meet health and safety standards. Your daycare center business must support the needs of the staff and the target markets.
  • Staff: Provide your daycare center business with a professional and well-trained staff. This is critical to support the existence of your daycare center.
  • Equipment and supplies: Make sure that your daycare center has the necessary toys, furniture, supplies, and other educative materials.
  • Insurance: A good daycare center has liability insurance. It is important to provide protection to your business from potential accidents and lawsuits.

Choose a Business Name

When you are looking to open a daycare business, you can start to file the documents with the constituted authorities. Or, you can start your website with a name to represent your business. It is crucial that the name is easy to remember, easy to pronounce, and unique.

Submit Your Grant Proposal

A grant proposal must have a cover letter to describe your daycare center and its mission. Make sure that the cover letter has formal yet informative language.

Besides, it must be specific about the funds you are requesting. You can share about previous communication you have had with the organization that provides you with the grant.

Keep in mind that you also need to add a timeline. It works to track when the funds will be used and for what goals. End the grant proposal with an explanation about the way you will evaluate the success of your daycare center and describe the qualifications of each staff you have.

Register Your Daycare Center

The kind of business structure that is ideal for a daycare center business in the US depends on some factors, including your goal, tax implications, and liability. The most common kinds of small business structures in the USA are below:

  • Sole Proprietorship: It is the most straightforward structure. As the owner, you are responsible for all obligations and debts of your business.
  • Partnership: There are two or more individuals in this business, and they share ownership as well as profits of the business.
  • Limited Liability Company: Known as LLC, it provides limited liability protection with the tax flexibility of a corporation.
  • Corporation: It is a different legal entity that separates its owners and offers the strongest protection to deal with personal liability.

Here are the steps on how to form an LLC:

  • Select a name of your business
  • File articles of the organization
  • Select a legal, registered agent
  • Consider the member vs. manager management
  • Create the LLC operating agreement
  • Tax and regulatory requirements
  • Conduct annual reports

How to Apply for Non-Profit Grants

Here is how to start a daycare center with government grants when you are ready for the grant application:

Apply to the Child Care and Development

Call the State and Territorial Child Care Subsidy Agencies. Alternatively, contact the Tribal Subsidy Agency. You can ask about the available grants. Other than that, you can apply to the Child Care and Development fund if you can meet the income qualifications.

You can meet the criteria if you are a primary caregiver, especially for children under 13. However, you must participate in an education program or a training program to stand with children.

Those agencies will review your applications for eight to twelve weeks. At that time, do not reapply before getting any notification about your proposal status.

During the application, you must agree to provide childcare for three years minimum and use the funds only for the customers you serve. You also have to meet the licensing requirements. You can earn about $500 to $10,000 USD as the fund for the grants to improve your daycare center.

Apply to Head Start Grant

If you want to start a non-profit daycare center to serve all children which is the local community in your area, try this step. You can file and apply for a Head Start grant.

Furthermore, you can use the Notice of Funding Opportunity, called NOFO Locator. This locator helps you find available Head Start grants. There are expert panelists to review your application and then compare it to the evaluation criteria. Make sure that you have checked the criteria before applying. Also, use Track Role Status, a tool to search for updates on your submitted grant proposal.

Panelists will determine if your daycare center is important in your area. For example, it will improve the education of the children. Head Start also does not set any award amount. Therefore, you may get the whole amount or some parts of the grant you requested.

Apply to Child Care and Development Block Grant

The next way how to start a daycare center with government grants is by applying for Child Care & Development Block Grant. It is the right option if you want to help at-risk children.

You are eligible to get a childcare development block grant if you can meet all the state and local requirements for a daycare center. Also, be sure that you can meet health and safety standards. Get help by contacting the U.S. Department of Health and Human Services to get information about a local grant and its application.

It is also good to try registering an account on the state’s official government website. There, you must fill out the application and submit it before the deadline.

Keep in mind that you must include data and evidence in your application. The Children’s Cabinet will evaluate the application.

Apply for the Community Facilities Grant Program

Do you want to start a daycare center in a rural area? If so, try to submit your application to the Community Facilities Grant Program.

You are eligible if your daycare center is in a small city with a small population which is under 20,000 people and you have a low-median household income. Be sure that the program status is available.

Besides, you need to choose your state by using USDA’s drop-down menu. Use it to find the available contact information to talk to a Community Program Specialist.

They will provide you with some information about the relevant forms. The good news is that the application is available all year round. Child care centers for low-income communities with a population under 5,500. Also, you must have evidence to have 80% of local non-urban median household income if you want to get prior.

Apply to the Child and Adult Care Food Program

Get grants for non-profit child care centers if you can collect receipts for healthy snacks and meals you will serve at your daycare center. After that, apply the grants to The Child and Adult Care Food Program.

If you are eligible, you will get food reimbursements. However, make sure that you are a public or a private non-profit daycare center to serve children under 12 years of age.

Besides, make sure that your daycare center is eligible to apply for Head Star Programs. Call your state agency to get more information about meal vouchers to apply. Wait for several months so you will get approval to get food reimbursements.

There will be a specialist that will review the documentation from your daycare center. They will provide you access to the CNIPS which stands for Child Nutrition Information and Payment System. If an application is approved, there will be a specialist to visit your daycare center. The purpose is to provide training to your staff. For example, how to prepare and serve meals for the children at your place.

How to Apply for For-Profit Grants

Here is how to start a daycare center with government grants, especially for-profit daycare:

How to Start a Daycare Center with Government Grants – MBDA Grant

To become eligible for a grant provided by Minority Business Development Agency, you need to contact the MBDA center in your local area. You can ask about the available grants for your daycare center. There will be a panel of three experts to review your application and give a final score.

You may need to wait for 150 days and if you are eligible, the Commerce Grant Program Manager will give you the funds for your daycare center.

You can access if you want to get more information about hundreds of grant programs that provide $500 billion in award funds.

Submit to and FedBizOpps

It is time to get more opportunities that can help you with funding for childcare providers. Use your proposal to present Commercialization Plan for your daycare center.

You can start by describing your daycare center, the target market, and the finances you need. After that, open and FedBizOpps to get funding opportunities.

There will be a peer review system to evaluate your application and the scientific findings based on your proposal. Also, you should be patient because it can take eight months to follow the review process. Once you got an award, you will follow up with reports and then explain the funding at your childcare center.

How to Start a Daycare Center with Government Grants – Apply for ECTA

ECTA stands for Early Childhood Training and Technical Assitance System. You can start your application to get childcare subsidies from ECTA.

To become eligible, your childcare center must serve low-income families. Also, be sure that all the staff members at your daycare center can pass the background checks, meet the local licensing standard, and get continuing education in the childhood development field.

Call the U.S. Department of Education, 21st Community Learning Centers Program. Ask them about the available subsidies. ECTA has a big concern about the costs of your daycare center’s workforce. The ECTA grants and the subsidies will be useful for training programs. Besides, the grants help your staff get living wages. 


How to start a daycare center with government grants? If you need financial assistance to start your daycare center, use government grants. As the day-care operators, you have the opportunity to apply for funds to cover the construction and renovation projects.

Other than that, you can use the money to buy equipment or solve the labor and administrative costs. The government also provides this grant to help low-income families to pay for their childcare expenses at your daycare center.


Here are other popular questions related to how to start a daycare center with government grants:

What types of loans are available if I want to open a daycare center?

There are several business loans to apply for. For example, you can try a Small Business Association or SBA loan. The loans offer an interest rate between 4.25 and 8.75%. The alternative sources of funding a daycare center are merchant cash advanced and seller-carry financing.

How much money do I get from a childcare center?

A daycare center gives a profit of about $37,000 per year. Some daycare owners explain that they can earn annual profits under $20,000 during the low end of the spectrum. Other factors that can determine the profit of a daycare center are the workforce size, the location, the kind of center you start, and the population density.

What kind of licenses or certifications do I need to start a daycare center?

You need eight licenses and certifications to start a daycare center. You must have a high school diploma (GED), get certified in first aid and CPR, has a Food Handler certification, General Business License, Group Family Child Care License, Director’s License, and the last is Health and Safety Permit.