The short answer: Single-location childcare centers sell for about 3.40× SDE, a $1,000,000-revenue center with $200,000 SDE prices near $680,000. With an SBA 7(a) or 504 loan you put down roughly 10% (~$68,000) plus closing costs and working capital. If the real estate is bundled into the loan, the amortization can stretch to 25 years instead of 10, which alone can lift your post-debt cash flow by tens of thousands a year.
Purchase price by center size
Childcare pricing converges on a single anchor: roughly 3.40× SDE. At a representative 20% owner margin, that also works out to about 0.68× annual revenue for a healthy, well-enrolled center.
| Revenue | SDE (~20%) | Price @ 3.40× SDE | Price @ 0.68× rev |
|---|---|---|---|
| $500,000 | $100,000 | $340,000 | $340,000 |
| $1,000,000 | $200,000 | $680,000 | $680,000 |
| $2,000,000 | $400,000 | $1,360,000 | $1,360,000 |
Reported SDE multiples for daycare and child-care businesses cluster between roughly 2.4× and 3.5×, with about half of transactions falling between 1.94× and 4.03× depending on quality, per business-brokerage benchmarking. Real estate ownership, accreditation, and enrollment strength are what push a specific center toward the top. Check current comps on the childcare multiples page.
What moves the multiple
| Pushes multiple up | Pushes multiple down |
|---|---|
| Enrollment at 85%+ of licensed capacity | Enrollment below ~70% of licensed capacity |
| Real estate owned and included in the deal | Short-term lease with weak renewal terms |
| NAEYC accreditation / high state QRIS rating | No accreditation, low or no quality rating |
| Low staff turnover, tenured teachers | Chronic understaffing or ratio violations |
| Diversified private-pay tuition base | Heavy concentration in a single subsidy program |
Down payment & the full cost stack
The sticker price isn't the cash you need. On an SBA acquisition, budget for:
- Equity injection, ~10% of project cost. Part can sometimes be a seller note on full standby that counts toward your injection.
- SBA + closing fees, guaranty fee, packaging, and closing costs.
- Diligence, legal review, a quality-of-earnings review, and a full pull of the state licensing/inspection file.
- License transfer timeline, many states require a new application or ownership amendment that can take weeks to months; build it into your closing calendar.
- Working capital, payroll through any enrollment dip during the ownership transition, plus deposits and pre-paid tuition reconciliation.
The down payment gets you in the door. Working capital is what keeps the classrooms staffed while enrollment catches up to the new sign on the building.
Bundling real estate changes the math
If the facility is owned and its purchase makes up the majority of loan proceeds, SBA rules allow the real-estate portion of the loan to amortize up to 25 years instead of the usual 10-year business term, see the worked example below for how much that improves cash flow.
A worked deal
You buy a center with $1,000,000 revenue and $200,000 SDE at 3.40×, a $680,000 price, financed 90% with an SBA loan. Below is the same deal financed two ways: a standard 10-year business-only term, versus a 25-year term because the real estate is bundled into the loan.
| Line | Business-only (10-yr) | With real estate (25-yr) |
|---|---|---|
| Purchase price (3.40× $200K SDE) | $680,000 | $680,000 |
| Equity injection (~10%) | $68,000 | $68,000 |
| SBA loan (~90%) | $612,000 | $612,000 |
| Est. annual debt service | −$101,200 | −$72,650 |
| SDE available | $200,000 | $200,000 |
| Cash flow after debt (pre-owner-wage) | $98,800 | $127,350 |
| DSCR (SDE ÷ debt service) | ~1.98× | ~2.75× |
Same price, same down payment, but stretching the real-estate portion to a 25-year amortization frees up roughly $28,500 a year in cash flow and pushes DSCR well above the typical 1.15×, 1.25× lender minimum. Reserve a market director's wage from that cash flow if you won't run the center hands-on, and the deal still clears comfortably. Model your own version in the valuation calculator, then read how SBA financing works.
Run this deal with your numbers
Price, down payment, loan payment, and cash flow after debt, instantly.
Frequently asked questions
Most single-location centers sell for roughly 3.40× SDE. A center with $1,000,000 revenue and $200,000 SDE prices near $680,000. With an SBA loan you'd put down ~10% (~$68,000) plus closing costs and working capital.
SBA loans generally require ~10%, 20% equity, with 10% common for qualified buyers. On a $680,000 center that's ~$68,000, and part can sometimes be covered by a standby seller note that counts toward your injection.
Around 3.40× SDE is the anchor, with a range of ~2.4×, 3.5×. Pay top-of-range only for high enrollment utilization, owned real estate, accreditation, and low staff turnover.
Yes, SBA guaranty and packaging fees, legal and quality-of-earnings diligence, a state license transfer that can take weeks to months, and working capital for payroll through any enrollment dip during transition. These add several percent on top of the down payment.
Sources
- Childcare / day care valuation multiples & benchmarks, BizBuySell Valuation Benchmarks; Peak Business Valuation.
- SBA 7(a) / 504 equity injection & real-estate amortization terms, SBA7a.loans; SBA504.loans; sba.gov 7(a) program.
