Loans for daycare centers or more specifically, commercial mortgages for daycare centers typically have a few challenges that set it apart from most. The special use nature of the property and relative high foreclosure rate make many lenders very cautious with in this industry. The management experience is critical and underwriting will spend a considerable amount of time getting a feel for the borrowers experience at running a business – and less concern over their credentials at caring for children. However, borrowers with good experience, credit, liquidity etc do have multiple options for their daycare center loan.

Conventional financing, meaning traditional loans offered by a bank with their own money, for daycare centers typically consist of a 5 year fixed rate, with a 20 amortization schedules. Loan to values on purchases hover at approximately 65% (maybe 70%) and 60% on refinances. Most conventional sources are very conservative with daycares and want to see 2 years of tax returns that show a debt coverage ratios of 1.3 to 1.4 compared to an a 1.2 for most building types. The debt coverage ratio is basically a tool that showsproves a level of cash flow. Management experience will be heavily scrutinized with conventional sources. One of the primary benefits of conventional financing is the rate will often be the lowest with this type of financing.

Read the rest of this entry »

Related posts

• Modern Debt Management Systems Can Produce Tremendous Savings
• Case Study Of Investment Properties
• Modern Debt Management Systems Can Produce Tremendous Savings