Daycare Startup Costs: Budget, Licensing and Staff Ratios
Updated 2026-11-10
Short answer: A licensed child care center is built around payroll that starts before enrollment fills, so the cash reserve is the largest single line. Our template budgets $362,000 for a 60-child center, of which $205,000 is working capital and $70,000 is building work to meet licensing. Published checklists price the small items (licensing fees of $200 to $2,000, furniture at $300 to $500 per enrolled child) but there is no reliable national figure for the building work, which is why you need local bids.
The cost table
Low and high figures are reported by Brightwheel, a child care management software vendor (Brightwheel). Typical figures are the defaults in our daycare financial projection template, which models a center licensed for 60 children (10 infants, 16 toddlers, 34 preschoolers).
| Line item | Low | Typical (template default) | High |
|---|---|---|---|
| Building improvements for licensing | $2,000 (safety modifications only) | $70,000 | $5,000 (safety modifications only); no published range for full renovation |
| Furniture, cribs, classroom equipment | $300 per child | $30,000 ($500 per child) | $500 per child |
| Kitchen equipment | $2,000 | inside the furniture line | $5,000 |
| Playground | about $10,000 | $25,000 | no upper figure published |
| Deposit and first month's rent | not in the source | $15,000 | not in the source |
| Licensing, inspections, legal | $200 state fee plus $100 per local permit | $6,000 | $2,000 state fee plus $500 per local permit |
| Staff recruiting and training | not in the source | $6,000 | not in the source |
| Website and pre-opening marketing | $2,000 | $5,000 | $5,000, plus $200 to $500 a month |
| Working capital reserve | 3 months of operating costs | $205,000 | 6 months of operating costs |
| Total | not stated | $297,000 | not stated |
Brightwheel also lists annual insurance: general liability $1,000 to $3,000, professional liability $500 to $1,500 and property $800 to $2,000, so $2,300 to $6,500 in total. Our template budgets $700 a month ($8,400 a year) for liability and property, which is above that range; check it against a broker's quote for your building and enrollment.
Where the template differs: the $70,000 building line is our placeholder for a leased commercial space that needs work to pass licensing (separate rooms, accessible restrooms, fire safety, a kitchen or food prep area). Brightwheel's $2,000 to $5,000 covers only safety modifications such as outlet covers and gates, so it is not a comparable number. Get a contractor's bid and your fire marshal's list before you set this line.
Licensing and ratios
Child care licensing is set by each state, and the staff-to-child ratio is one of the rules that varies most. As the policy group First Focus on Children notes in its state data, ratios are set at the state level and vary by age group and care setting (First Focus on Children). Look up your state's licensing agency before you write the staffing plan; the licensing office sets the rules for group size, floor space per child, staff qualifications, background checks and inspections.
Ratios drive payroll more than any other input. Here is the arithmetic with illustrative ratios of 1:4 for infants, 1:6 for toddlers and 1:10 for preschoolers (these are examples, not your state's rule):
| Group | Children | Illustrative ratio | Minimum staff in the room |
|---|---|---|---|
| Infants | 10 | 1:4 | 3 |
| Toddlers | 16 | 1:6 | 3 |
| Preschool | 34 | 1:10 | 4 |
| Total | 60 | 10 |
Two points follow from this. First, you round up: 10 infants at 1:4 need three staff, not 2.5. Second, as an inference, a room with only a few enrolled children still needs one adult in it, so staffing during the ramp does not fall in step with revenue. The template carries 11 teachers (6 lead, 5 assistant) plus a director and a cook from month 1, about $47,800 a month with 15% payroll burden. Replace those counts with your state's ratios, then add coverage for breaks and absences.
What owners forget
Payroll before revenue. You usually cannot enroll children until the license is issued, but the director and lead teachers have to be hired and trained first. The template's tuition ramps from 40% of capacity over 12 months while payroll starts at full staffing.
Size the reserve to your payroll. The template's monthly payroll plus fixed costs come to about $54,800. Brightwheel advises an emergency fund of three to six months of operating expenses, which would be about $164,000 to $329,000 at that level; the template's $205,000 reserve is about 3.7 months, and its lowest cash point stays just above zero while enrollment fills. If you open with full staffing or fill more slowly, push toward the higher end.
Rent and space. The template uses $7,500 a month for rent, which is about 10% of the $78,000 a month the template earns at full enrollment. A lease that is too large for your enrollment ramp is a common reason centers run short.
Local permits. Brightwheel lists $100 to $500 for each local permit; fire, health and zoning approvals can all apply.
Pricing. Do not copy the template's tuition. Child Care Aware of America reports a 2025 national average of $13,184 a year for child care, with center infant care at $15,636 and 4-year-old care at $12,555 on one of its three averaging methods (Child Care Aware of America). The template's $1,350 a month for infants is $16,200 a year, close to that average. Replace it with the rates charged by centers within your drive-time radius, and include subsidy-paid places at the subsidy rate.
How to fund it
- Owner cash. A start-up SBA 7(a) loan needs at least a 10% equity injection of total project costs under SOP 50 10 8, effective June 1, 2025, per Whiteford. Many lenders want more.
- SBA 7(a). Up to $5 million for equipment, furniture, working capital and improving buildings (SBA). Terms run up to 10 years for equipment and 25 for real estate (13 CFR 120.212). Working capital for the enrollment ramp is an eligible use, which matters because it is your largest line.
- Equipment and playground financing. Furniture and playground equipment can be financed or leased.
- State and local programs. Some states and cities offer child care grants or loans. Check with your licensing agency for current programs.
The template uses $60,000 of owner cash (about 17% of the funding) and a $302,000 loan at a placeholder 10.5% over 10 years, which is about $4,075 a month or $48,900 a year. Replace the rate with a quote and run the payment through the DSCR calculator, which compares it to the cash your center is projected to generate.
How startup costs flow into a 5-year projection
- Building work, furniture and the playground ($125,000 in the template) depreciate over 7 to 10 years, about $13,800 a year straight-line.
- Deposit, licensing, recruiting and marketing are cash out before opening.
- The reserve funds the gap between payroll and tuition. The projection should show enrollment rising month by month, with the lowest cash balance in the first 12 to 18 months.
- The loan adds about $28,600 of interest and $16,700 of principal in year 1.
- Occupancy is the big lever. The template's tuition lines use a 40% starting enrollment and a 12-month ramp. Do not model 100% occupancy from day one or forever; the template notes that mature centers run about 85% to 95% full, which is a modeling note in the template, not a figure from a primary source. Use the break-even calculator to see how many enrolled children cover your fixed costs.
Next step
Open the daycare financial projection template, enter your state's ratios as headcount, your local tuition rates and a contractor's bid for the building work, then read the lowest cash balance. This is general information, not legal advice; confirm licensing requirements with your state agency and numbers with your lender and accountant.