How Child Care Centers Can Benefit from Coronavirus Stimulus Bill

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In the wake of the financial pressures caused by the coronavirus pandemic, Congress has passed what’s known as COVID-III, or the CARES Act – legislation that includes billions of dollars in relief for child care centers and their employees. Here’s what you need to know.How much money is available to child care organizations under the new stimulus package? 

  • The Small Business Administration (SBA) can now provide $349 billion in forgivable loans to small businesses with fewer than 500 employees. The two main types of financial aid are:
  • Payroll Protection Program (PPP); maximum loan amount per business is $10 million
  • Emergency Injury Disaster Loan (EIDL); maximum loan amount per business is $2 million
  • The bill includes $3.5 billion in additional funding to states for the Child Care Development Block Grant Program (CCDBG) to provide child care assistance to essential/emergency personnel.
  • The bill also offers an additional $20 billion in funding for the State Fiscal Stabilization Fund, allowing states to award funds to early childhood education programs and services
  • Finally, the bill provides $750 million in grants for all Head Start programs to help them respond to COVID-19-related needs of children and families.
  • NOTE: federal loan assistance is available for midsize and large child care providers through the Treasury’s Exchange Stabilization Act.

What are the eligibility requirements for the SBA loans?


  • A child care facility must have been in operation as of February 2020, have employees (or independent contractors) that it pays, and be “substantially impacted” by COVID-19.
  • Child care centers need to acknowledge the funds will be used to retain workers or for other covered purposes.
  • Unlike most SBA loans, child care centers will not have to demonstrate that they cannot get funding elsewhere. In addition, the agency’s typical collateral and personal guarantee requirements are waived.


Those eligible are the following with 500 or fewer employees:

  • Sole proprietorships, with or without employees
  • Independent contractors
  • Cooperatives and employee owned businesses
  • Tribal small businesses

Small business concerns and small agricultural cooperatives that meet the applicable size standard for SBA are also eligible, as well as most private non-profits of any size.

What is meant by “forgivable loans?”


  • The SBA will forgive a borrower’s debt, subject to certain limits. For example, borrowers could receive forgiveness for up to eight weeks of payments on certain expenses such as payroll, mortgage interest, rent and utilities.
  • The bill includes provisions that limit the amount of forgiveness, such as overall reduction in wages and if the borrowers uses the funds to pay employees with annual incomes above $100,000 (these higher wage employees are ineligible).


  • EIDLs will need to be paid back, but payment is deferred for 6 to 12 months. However, you can apply for an Emergency Economic Injury Grant, which do NOT need to be repaid. These grants provide an emergency advance of up to $10,000 to small businesses and private non-profits harmed by COVID-19 within three days of applying for an EIDL.

How do I apply for an SBA loan?


Child care centers will need to apply through banks, credit unions and other lenders. To find a lender near you, visit: You can also call your bank and specifically reference the 7(a) small business loan to see if it is an approved lender.


Who can lend the money?


  • Eligible lenders, the majority of which are banks, are now authorized to make loans under the program. Lenders will be given delegated underwriting authority, so each loan will not have to be approved by the SBA.


  • This money will come directly from the U.S. Treasury after you fill out the online form and are approved for a loan.

What are the rules around using the funds? 


  • The bill lets small businesses (including child care centers) use the funds for certain “allowable uses,” which include salary and payroll costs, healthcare, mortgage/rent, utilities and interest on other debt incurred before the covered period. EIDL


  • Funds from EIDL are available to pay for expenses that could have been met had the disaster not occurred, including payroll and other operating expenses.

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