Financing For Daycare

by admin on December 18, 2008

Many want to make a day care center and make it as a successful business. And these dreamers engage in this line of business full time and thus are self employed for it. One of the reasons for this is to be able to earn more while one is staying at home. Other reasons include the drudgery of a nine to five job for another as a boss. So until and unless one performs actions in pursuing their dream, having as day care business will remain just that, a dream. But this need not always is just a dream for here are some steps to undertake in order for one to find the finances to realize that dream.

1) Business planning. Like in every business, a day care must be borne forth of a business plan. How one seeks to achieve business objectives is a key ingredient in making this business plan. Even though the business is operated from home, having a business plan is crucial in making this business work. The business plan is in a nutshell the product of diligent research and well thought out planning which would assist financial institutions in making a decision whether or not one would provided a loan for the business. It must include the general objective of the center, how it will operate efficiently and effectively, especially as it is home-based, and a financial projection of revenues for one’s business.

2) Business structuring. This details all the financial matters involved in the business. Costing the preparation, operation and eventual continuous increase in business is essential to make known to financial institutions how much money is needed for the business to make money. Also included are the operational expenses, supplies and educational expenses needed for the day care.

3) Also, owner’s equity needs to be provided since lending institutions would want some participation on one’s end in the financial aspect of the business and not merely operations. Thus one’s financial interest in the business must be provided to entice lenders to commit money for one’s endeavor. Thus investing in one’s own business would provide signals to the lender that the commitment to succeed is clearly evident.

4) Collateralize. In order for one to make a clear commitment to the success of the business, one needs to put up some form of collateral for the lender to be able to be confident that return of the money lent would be made. It would also provide two things, confidence in the success of the business and avenue for a lender to recoup the loan made. So by putting up as a collateral one’s home or vehicle, one is able provide an option for the lender to recover the loan costs if ever the business fails.

As one can see, reaching out to make the dream a reality is not an easy task to do. One has to make a business plan, structure the business, inclusion of personal equity in the loan or offering collateral are some ways to which a loan may be obtained to finance the dream.

See: How to start a daycare

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Tom Shieh has written 323 post in this blog.

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