How to Start a Daycare Center with Government Grants

Last Updated: November 30, 2021 References

Has your passion for serving children and families inspired you to open a daycare center? You know you have the drive, compassion, and know-how to give back to your community, but the start-up costs can be steep. When opening a daycare center, you might spend anywhere between $10,000 to $50,000 USD. Before you reach for your wallet, look into government grants. We'll share some tips on how to pay for your daycare center with a variety of grants. You'll also learn what funds are available to you if you're a non-profit or a for-profit daycare center.

Method 1

Method 1 of 3:

Qualifying for Grants

1
Decide if you’ll start a for-profit or non-profit center. Most government grants are targeted to 501(c)(3), or non-profit, organizations. If you plan to run a non-profit center, you’ll be eligible for federal, state, and private grants, many of which will be tax-exempt. If you decide on a for-profit center, you’ll qualify for less grants, but you can apply to some organizations, like the MBDA or the SBIR, that may provide you larger lump sums because they have more resources.^{[1]
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2
Make sure you’re up to date with your child care center licensing. To obtain your Child Care Center License, attend an orientation, review your state’s Child Care Center licensing laws and regulations, and complete an application packet. After you’ve submitted your packet and paid any relevant licensing fees, your state’s Child Care Licensing Program will review your materials and award you with a license if you’ve met all the requirements.^{[2]
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- Contact your local Regional Office in your state for an orientation schedule.
- While it isn’t required, you can also take classes in early childhood development or education to enhance your knowledge about running a daycare center. Include details about this coursework in your grant proposals.^{[3]
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3
Calculate how many students your pre-K center serves. Most states that use a funding formula will award a grant amount based on the amount of children who require resources and assistance. Whether you run a non-profit or for-profit center, it will qualify for state funding if it provides early childhood education.^{[4]
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- Contact the State Administering Agencies (SAAs) and ask to apply for a grant based on your state’s funding formula.^{[5]
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- If you serve at-risk children, students with learning differences, or English-language learners, you will likely receive additional funding.
- Colorado, Iowa, Kentucky, Maine, Oklahoma, Texas, Vermont, West Virginia, Wisconsin, and the District of Columbia all currently offer a state funding formula.
4
Write a grant proposal. Include a cover letter that describes your child care center and its mission. Keep your cover letter’s language formal and informative and be specific about the funds you’re requesting. Share any previous communication you’ve had with the organization that is offering the grant.^{[6]
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- Add a timeline that tracks when funds will be spent and for what purposes. End with an explanation of how you’ll evaluate the success of your center and describe your staff’s qualifications.

Method 2

Method 2 of 3:

Applying for Non-Profit Grants

1
Submit an application to the Child Care and Development fund if you qualify as low-income. You’ll be eligible if you’re a primary caregiver for children under 13. You must be employed or enrolled in a training or education program to support children. Contact the State and Territorial Child Care Subsidy Agencies or the Tribal Contact Subsidy Agency to ask about current available grants. Wait 8-12 weeks for your application to be reviewed. Reapply during another review cycle if your proposal wasn't accepted the first time.^{[7]
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- You’ll need to agree to provide childcare for at least three years and to use funds only for the families you serve. You’ll also have to keep up to date with licensing requirements.
- You can earn between $500 to $10,000 USD in funds to enhance your center.
2
File your application for a Head Start grant if your non-profit center serves all children in your local community. Use the Notice of Funding Opportunity (NOFO) Locator to find Head Start and Early Head Start grants. Expert panelists will review your application and compare it to a list of evaluation criteria. Check before you apply to confirm how you’ll be assessed. Look for updates on your grant proposal with the Track Role Status tool.^{[8]
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- Usually, panelists determine if your center is needed in your region, if it will enhance the education of children, and if your budget is realistic.
- Head Start doesn’t have a set award amount. You may receive the whole amount or just part of the grant you requested.
3
Apply for a Child Care & Development Block Grant if you serve at-risk children. You’ll qualify if you follow all state and local requirements for child care centers and if you’re complying with health and safety requirements. Contact the U.S. Department of Health and Human Services to ask about applying for a local grant. Register for an account on your state’s official government website, fill out your application, and submit it by the posted due date. If you need to re-apply, you’ll need to wait a year.^{[9]
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- Include evidence and data in your application. The Children’s Cabinet, who evaluates your application, wants to know how you’ll provide intervention to at-risk families.
- You’ll need to pursue other funding because a block grant is usually supplemental.
4
Submit an application to The Community Facilities Grant Program if you serve a rural area. Your center must also be located in a small community with a population less than 20,000 and a low median household income. Make sure the program’s status is open. Select your state from USDA’s drop-down menu and find the contact information for a Community Programs Specialist to speak to. They'll tell you how to fill out any relevant forms. Applications for this program are accepted all year.^{[10]
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- Child care centers in low-income communities with a population of 5,500 or less and below 80% of the local non-urban median household income are prioritized.
5
Collect all receipts for healthy meals and snacks you’ll serve at your center to apply for The Child and Adult Care Food Program. You’ll qualify for food reimbursements if you’re a public or private non-profit child care center that serves children under 12. Your center must also be eligible to participate in Head Start Programs. Contact your state agency for more information about applying for meal vouchers. You can expect to wait several months until your center is approved to take part in food reimbursements.^{[11]
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- When a specialist has reviewed documentation from your child care center, they’ll give you access to the Child Nutrition Information and Payment System (CNIPS).
- If an application is accepted, a specialist will visit your center to train your staff on how to prepare meals for children at your center.

Method 3

Method 3 of 3:

Applying for For-Profit Grants

1
Register your daycare as a business and obtain your DUNS number to apply for an MBDA grant. To qualify for a grant from the Minority Business Development Agency (MBDA), the project you’re seeking funding for must be relevant to a current grant announcement. Contact your local MBDA center and ask what grants might apply to your center. A panel of at least three experts will review your application and provide a final score.^{[12]
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- After about 150 days, the Commerce Grants Program Manager will award your center funds if it was selected for a grant.
- Grants.gov has a main database with 1,000 grant programs that amount to $500 billion in award money altogether.
2
Submit your certification as a Small Business Concern to receive funds. Present a Commercialization Plan with your proposal. Describe your daycare, the market for it, and the finances it requires. Find an opportunity related to innovation in healthcare or education on SBIR.gov or FedBizOpps. Your application will go through a peer review system that evaluates the scientific findings in your proposal. This review process can take up to 8 months.^{[13]
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- After you receive an award, you’ll follow up with reports and explain how your funds have resulted in advancements in childcare or early childhood education.
3
Apply for child care subsidies from the Early Childhood Training and Technical Assistance System (ECTA). To qualify, your center needs to serve low-income families. All staff members at your center must also pass background checks, meet local licensing requirements, and pursue continuing education related to childhood development. Contact the U.S. Department of Education 21st Community Learning Centers Program to ask about opportunities for subsidies.^{[14]
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- The ECTA mainly focuses on costs related to your center's work force. The subsidies the ECTA grants not only help with training programs but also with making sure your staff receives living wages.
- The amount of time you’ll wait before you’re granted financial aid will depend on the state you work in.