How much does it cost to start a daycare? Home and center budgets

A home program runs in your residence — licensing defines a group child care home as two or more adults caring for children in the provider's residence — so the commercial lease and build-out lines in a center budget have no equivalent here.

The money goes instead to capacity-driven lines: licensing fees, safety work, equipment, training, insurance and food, each sized to the number and ages of children your state licenses you to keep.

Your capacity comes from your state's license categories.

A federal scan of state licensing rules, current as of December 31, 2020, counted 38 states including DC that license group child care homes, with most states setting the group-home threshold at 7 or more children and 23 of those 38 capping group homes at 12 children.

The same scan found Louisiana, New Jersey and South Dakota with no mandatory licensing for any home-based providers as of 2020 — voluntary systems where requirements attach when public funds pay for care.

Treat all of that as dated context, not your state's current rule; take your category and capacity from your state child care licensing agency.

The lines to price: application and initial-visit fees set by your state; home safety work — fencing, safe-sleep equipment, smoke and carbon-monoxide detection, locked storage — to the standard your state's rules set; furniture, cribs, cots and play equipment for each age band you will enroll; liability insurance; and food service.

Training is a recurring line rather than a one-time one: the same 2020 scan found annual ongoing training for group child care home providers ranging from 6 to 30 hours with a median of 15, and for assistant providers 5 to 24 hours with a median of 12.

What the research for this page did not verify is a national figure for licensing application fees or timelines — they are state-specific, so pull the current fee schedule from your state child care licensing agency before you budget anything else.

Our guide to the steps to start a daycare walks the application sequence around those fees in order.

Below your state's threshold, subsidy still carries federal rules. A license-exempt provider who is paid with CCDF subsidy must still meet federal health, safety and background-check requirements, with a main exception for relatives that applies to the health and safety rules (45 CFR 98.42(c)) — so if you will accept CCDF-subsidized children, those checks and safety items belong in the budget even if you open below the licensing threshold.

For centers, the only published national investment figures this research verified come from childcare franchises' own franchising pages, accessed October 2026.

The Learning Experience lists a $60,000 franchise fee, a total investment of $650k-$800k, and requirements of $250,000 in liquid capital and a $400,000 net worth, with a 7% royalty on gross revenue.

The Goddard School puts build-to-suit lease startup costs at $1,003,500 to $1,503,000 and land-and-building purchase at $5,493,500 to $8,908,000, referring readers to Item 7 of its 2026 FDD for the detail.

Primrose Schools states an $80,000 initial franchise fee with minimum liquidity of $1.5 million; Kiddie Academy requires $250,000 in liquid capital to lease or $750,000 to $900,000 to purchase, and net worth of $750,000 or $1 million respectively.

Neither of those two brands' pages, as we read them, publishes a total investment range — so no total is quoted here.

Treat the franchise ranges as scale, not as a quote for your building.

An independent center budgets the underlying lines separately — site lease or purchase and deposits, contractor build-out, furniture and equipment by age band, playground surfacing, licensing fees, insurance, software and pre-opening payroll — and pays no franchise fee or royalty to a franchisor.

The line with no honest national number is build-out.

Our research did not verify a per-square-foot build-out cost for child care centers from any primary source, and a single figure would mislead anyway: the bill depends on the building you start with, your state's facility requirements and the capacity you are licensed for.

Get contractor bids against your actual floor plan instead of budgeting from someone else's estimate.

Licensing fees are the same story at smaller scale: no national figure was verified, so take the current application, inspection and renewal fees from your state child care licensing agency's fee schedule. Confirm before you commit money: the franchise figures above are the brands' own published requirements as of October 2026, and state fees and facility rules change — verify both before the budget goes into a business plan.

Payroll is the line that starts running before your revenue does.

A September 2021 U.S. Treasury report, citing a Center for American Progress cost analysis, put wages at no less than 50-60 percent of child care expenses on U.S. averages, with labor's share larger for infant care — and in a start-up year that cost is front-loaded, because the staff you need on opening day must be hired and oriented while enrollment is still building.

Budget the pre-opening payroll as its own line.

A director comes first, to carry the licensing paperwork, the policies and the enrollment systems; lead teachers and assistants come next, sized to the rooms you will actually open with, not the ones you hope to add in year two.

Their time before opening day — orientation, any pre-service training your state's rules require, classroom setup — is paid time on your payroll while tuition is still zero.

Price the wages against real benchmarks rather than guesses: the salary pages on this site carry the federal wage survey data by role and state, starting with childcare teacher pay — use them to set offers your budget can carry.

Wage-hour questions around that payroll (overtime, how assistants and aides are classified, minors on staff) are federal and state employment law; take them to employment counsel or the DOL before you finalize the model.

Then budget the runway behind the payroll.

The same Treasury report said most for-profit child care facilities operate on razor-thin profit margins, usually below 1 percent — a structure that leaves little room to absorb an opening that ramps slowly.

Your working capital has to cover months of payroll, rent and insurance while enrollment builds; a cushion that only reaches opening day is not a cushion.

Cut against capacity, not quality.

License for the number of children you can fill at opening, furnish for the ages you will actually enroll, and phase the rest — rooms, equipment and playground features can be added as enrollment justifies them.

Build-out beyond what your license covers is space you pay for without being able to fill it with enrolled children.

The first lever to pull is format.

Opening as a family child care home keeps the commercial lease and build-out lines out of the budget entirely, and the group-home category described above — where your state licenses one — is the intermediate rung: a larger program still run from a residence.

Where your state's rules allow it, starting home-first means opening doors and proving enrollment before you take on a center-scale budget.

If you buy a franchise instead of building independent, the cuts are in the brands' own terms: Primrose offers a $50,000 franchise-fee discount for veterans, and the franchising pages (accessed October 2026) publish the liquidity and net-worth floors you must clear — compare those floors alongside the fee and the ongoing royalty (The Learning Experience's is 7% of gross revenue) before you sign anything.

Software is a line where secondhand numbers will steer you wrong: neither brightwheel nor Procare publishes list prices — both pricing pages ask for your program's details and return a quote.

Put "management software (by quote)" in the budget and get the quotes before you commit a figure to the plan.

The same discipline applies to staffing: match coverage hours to the enrollment you have confirmed, because coverage beyond it is pre-opening payroll with no revenue under it.

Four funding sources show up in this research: your own and any investors' capital, federal nutrition reimbursement, subsidy revenue, and debt.

State-funded startup grant programs are a fifth possibility, but they were not compiled nationally in the research for this page — they are state-specific, so ask your state child care licensing agency what is currently funded where you operate.

Nutrition reimbursement offsets a line you will pay from the first week.

The Child and Adult Care Food Program (CACFP) reimburses qualifying meals and snacks — no more than two meals and one snack, or one meal and two snacks, per child per day, for centers and day care homes alike — at rates the U.S. Department of Agriculture sets annually; the current cycle, July 1, 2026 to June 30, 2027 for contiguous states, pays centers per child: breakfast $2.54 free, $2.24 reduced, $0.42 paid; lunch or supper $4.76 free, $4.36 reduced, $0.45 paid; snack $1.30 free, $0.65 reduced, $0.12 paid.

Day care home rates are Tier I $1.74 breakfast, $3.31 lunch or supper, $0.98 snack, and Tier II $0.62, $1.99 and $0.27.

Subsidy revenue is the second: families who qualify for child care assistance pay with CCDF funding, and two federal rules shape a new program's cash flow.

Timing — under the "Restoring Flexibility" final rule effective July 13, 2026, states must either pay providers prospectively or within 21 days of a complete invoice; the 2024 requirement to pay prospectively and by enrollment was rescinded.

Structure — current 45 CFR 98.45(m) lets states support providers' fixed costs by paying on enrollment rather than attendance, or by paying in full when a child attends at least 85% of authorized time, among other options.

Ask your state agency which options it uses; the rule frames these as ways to support providers' fixed costs.

Price tuition against data while you are at it: states set CCDF subsidy rates using a statistically valid market rate survey or an approved alternative methodology, such as a cost estimation model, conducted no earlier than two years before the CCDF Plan — so every state has a current rate study, and it is a local benchmark for a business plan.

Debt is the fourth source: SBA 7(a) loans go up to $5 million, and non-profit businesses are ineligible for SBA business loans (for-profit subsidiaries are eligible), so a nonprofit daycare cannot use 7(a).

Child care does not appear on the regulation's list of ineligible business types, so a for-profit center can apply, subject to lender credit review — read off the ineligible list itself; the SBA pages we read do not address child care eligibility explicitly, so confirm eligibility with an SBA lender before you count on it.

This page is employer information, not licensing or legal advice. Startup costs, licensing fees, funding rules and reimbursement rates change; confirm current figures with your state child care licensing agency, and take wage-hour and business-structure questions to employment counsel or the DOL before you commit money.