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does anyone know anything about daycare financing in NY?

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The BAF Group LLC

We have sold a number of day cares. A critical issue from the Bank's perspective is whether you are buying the business alone, or with the building it sits in, as well. If it is with the building, believe it or not it is an easier task. That way, the Bank has a tangible asset (the Real Estate) with which to secure the note.

If you are only buying the business - again, from the Bank's perspective - what are you buying? It is almost 100% good will, and that has no resale value to the Bank, if you default on the note. In most cases, a default occurs because the Buyer has allowed the business to erode, so there is nothing for the Bank to take back and resell, in order to recover its loss.

And Banks do not take risk! That means getting an SBA loan, first and foremost. What many people do not understand is that SBA does not actually lend money: It guarantees a major portion of the money that the Bank lends. But the Bank and the SBA will definitely want personal guarnatees on this, as well. That means putting your house (if you own one) up as security.

Finally, who will be the day care Director? If it is you, there is less difficulty. But if you are not licensed as a Director, what happens if the current Director, or any future Director quits or gets fired? Does that put you out of business? The Bank and the SBA will want to know that answer; it is a vital one. The SBA has become extremely tough about loans to people who are not experienced in and qualified to operate any business. The certification issue concerning day care Directors is a key one, because in most states, without a certified Director, you cannot operate the business.

Your question was rather vague; I hope this answers your need.

Dec 4, 2009