S 273119th CongressIntroduced

Small Business Child Care Investment Act

Introduced: Jan 28, 2025

Standard Summary

Comprehensive overview in 1-2 paragraphs

The Small Business Child Care Investment Act would let certain nonprofit child care providers participate in SBA loan programs that are already available to small businesses. The bill creates a defined category called “covered nonprofit child care providers” and treats them as small businesses for purposes of SBA 7(a) loans and the 504 (Small Business Investment Act) loan programs. Loans would be made through participating banks, certified development companies, or other lenders on a guaranteed/deferred basis (no direct SBA lending). Eligible providers would need to meet licensing, tax-exemption (501(c)(3)), ownership and workforce background check, size, and non-discrimination requirements. The act also requires annual reporting to Congress on loans issued to these providers and related program activity. In short, the bill expands access to SBA financing for nonprofit child care providers, subject to specific eligibility criteria and operating through lenders with SBA guarantees, rather than direct SBA lending.

Key Points

1Definition and eligibility for covered nonprofit child care providers.
2- The bill adds a new category of eligible small businesses: organizations that are licensed, 501(c)(3) nonprofits primarily providing birth-to-school-age child care, compliant with industry size standards, and that have staff/regular volunteers meeting criminal background checks. They may also offer after-hours care or preschool/prekindergarten programs and must certify they will not discriminate in business practices.
3Eligibility for SBA loan programs (7(a) and 504).
4- Covered nonprofit child care providers are deemed small businesses for loans under SBA programs. Loans must be made through participating lenders via deferred/guaranteed arrangements; the SBA cannot make direct loans or participate in immediate lending to these providers.
5Loan guarantees and amounts.
6- For loans exceeding $500,000, the provider must obtain a timely payment guarantee from another party. Loans up to $500,000 may be eligible without a guaranteed timely payment requirement.
7Restrictions related to First Amendment considerations.
8- The Administrator may not deny eligibility for these loans based on associations with entities protected under the First Amendment, but funds cannot be used for religious activities. This aims to balance access to capital with constitutional protections.
9Reporting requirements.
10- Within one year of enactment and annually thereafter, the Small Business Administration must report to Congress on the number and amount of 7(a) and 504 loans to covered nonprofit child care providers, plus any other relevant information.

Impact Areas

Primary group/area affected- Nonprofit child care providers that are licensed, primarily serve children birth to school age, and are organized as 501(c)(3) organizations with adequate staffing background checks. These providers could gain access to SBA financing they previously could not obtain as non-bankable or non-capitalized entities.Secondary group/area affected- Lenders participating in SBA programs (banks, certified development companies, and other financial institutions) who would originate and guarantee these loans through a deferred/guaranteed structure rather than through direct SBA lending.Additional impacts- Potential improvements in child care capacity and quality due to expanded financing for facilities, equipment, and operations.- Increased administrative oversight and reporting for the SBA to track program participation by nonprofit child care providers.- Compliance considerations for recipients (licensing, background checks, size standards, nondiscrimination) and for lenders integrating these new eligible borrowers into their SBA loan activities.

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