Child Care Finance

Any new or existing child care that is licensed in Red Lake Nation, White Earth Nation or the counties of Beltrami, Clearwater, Hubbard, Kittson, Lake of the Woods, Mahnomen, Marshall, Norman, Pennington, Polk, Red Lake, and Roseau is eligible to apply. A Rule 2 non-profit would also be eligible, as are for-profit child care centers, in those eligible tribal nations and counties.

Most likely. To qualify, you need to be in the process of getting licensed through your respective county licensor. If you are in the process and have passed either the licensor inspection or the fire marshal inspection, you can apply for a loan.

Yes, while the funds cannot be used to purchase a residential property, you are eligible to apply for funds for needs within the child care space.

The program uses two types of financing: A forgivable loan to child care providers who are creating new slots, or increasing their slots; a low interest loan for those child care providers who may need equipment, supplies, or other soft costs, but do not plan on adding more slots. Note: the low interest loan cannot fund real estate improvements.

Both types of financing are considered loans, but the forgivable loan is not paid back. Each year of the loan, a portion is forgiven so that by the end of the loan term, the loan balance is zero. Each year an IRS form 1099-C (cancellation of debt) will be prepared and submitted to you and the IRS for that year’s amount that has been forgiven. This amount is considered Income to you, so you should discuss it with your tax preparer.

The low interest loan will have regular monthly payments at 1.5% with a term as high as five years. The approximate monthly payment for a $5,000 loan at 1.5% for 60 months is $ 86.55.

The maximum amount for a forgivable loan is $5,000. Forgivable loans have an interest rate of 0% with a maximum five-year term. As long as you provide licensed child care during the course of those five years, a portion of the principal balance is forgiven each month.

The low interest loans start at 1.5% with a maximum five year term. If you have a ParentAware rating at the time of application, the interest rate is reduced to 0.5%. Further, if you become ParentAware rated during the loan term, the interest rate will be reduced to 0.5% for the remainder of the term.

Of course!  Borrow to your needs for the child care business.

Here are some typical loan requests based on months of providing care:

• At least 12 months providing child care—$1,500           
• At least 24 months providing child care—$1,501 – $ 2,500     
• At least 36 months providing child care—$2,501 – $ 3,500                     
• At least 48 months providing child care—$3,501 – $5,000                     

The remaining principal amount of the loan at the time of closure will need to be paid, according to the payment schedule shown on the Note. We will need you to sign an amendment.

If you find that you need to temporarily close your child care business, please contact our team promptly. You may use the contact form provided at the bottom of this website page. If you have a low interest loan versus a forgivable loan, we will work with you to determine if the automatic payments need to be halted for a time. Depending on the amount of time you are temporarily closed, the loan may also be extended. Each case is different.

The forgivable loan has the broadest utility. It can be used to meet safety, fire marshal or licensing requirements, such as: installation of handrails, egress windows, fences, smoke and carbon monoxide detectors, fire door, and other safety improvements. It can also be used to purchase toys, books, equipment, supplies and other soft costs in your pursuit to provide quality care. The low interest loan can be used for many things, excluding real estate improvements: purchase toys, books, equipment, and supplies used to provide quality care, and other soft costs. Costs to attend training to maintain your license is also an eligible use of funds. Northwest Minnesota Foundation lending staff reserves sole discretion to determine if the use of the requested funds is eligible.

Note: toys and supplies should be new and meet consumer product safety commission standards.

If you have any question about what is eligible, please do not hesitate to ask. This is not a comprehensive list.

The forgivable loan can be used to offset the costs to finish the space. The low interest loan, due to federal rules, has some restrictions. It’s best to contact us to discuss the needed building improvements.

In short, no; this program is not intended for home maintenance projects. While we recognize that the day-to-day use of the home for child care has impacts on the home, projects that have too much of a connection to normal home maintenance and improvements don’t qualify for the program. This includes room remodels, siding and roofing, driveway paving, decks, HVAC, water heaters, kitchen appliances (in the home’s primary kitchen). Exceptions can be made if the project is being required by the licensor as a safety matter. Northwest Minnesota Foundation lending staff reserves sole discretion to determine if the use of the requested funds is eligible.

If you incurred those costs within the last 12 months from the date of applying and your request is approved, you are permitted to direct the money to pay off or pay down a loan (as long as the loan was specifically related to establishing your child care) or reimburse yourself. You should include receipts or other proof of those costs with your application. Be sure to discuss this strategy with your accountant/tax preparer to be aware of tax implications.

To begin, fill out our Child Care Financing Inquiry form. From there we will reach out to you to help you determine your eligibility and answer any immediate questions you may have.

Our full Child Care Loan Application is also available to download, fill out, and submit in paper form.

While we will review your credit as part of the application review process, a credit score is not the sole determining factor for a decision to approve or deny your request. If your credit score is determined to be “low” (under 600), we will most likely have additional questions and will contact you.

The forgivable loan does not require collateral. The low interest loan is a conventional business loan and does require collateral. Collateral will be restricted to your child care business equipment, supplies, toys, and the like.

Email submission is encouraged to speed up the process. From the time of receipt, please allow 10 business days for a loan review and decision. Although we make every effort to review and make a decision quickly, sometimes special situations arise, which may require additional time. Once approved, allow 10 days to schedule a closing date.

Absolutely not (unless you want to come to Bemidji for other reasons). We bring the closing to you at a time and location that’s convenient for you. Closings are pretty straight forward and only take about half an hour, depending on questions you might have.

The forgivable loan has no out of pocket fees or closing costs. There is a $25 fee for the credit report; and additional filing fees will be required as necessary. The low-interest loan typically only has one closing cost for the UCC-1 filing fee, which is currently $20.00. Of course, there are exceptions from time to time, which will be addressed on a case by case basis.

This program started on July 1, 2018. The forgivable loan program has limited funding available each year. We encourage you to apply promptly.

The low interest loan is a special part of our regular microloan program, so applications will be accepted on an ongoing basis.

The program is on a first-come, first served basis. Complete applications are processed first. If your application is deemed incomplete, you will be contacted promptly for any missing information. Please note that submitting an application does not imply automatic approval. If you have questions, don’t hesitate to contact us via our Child Care Financing Inquiry form prior to submitting.

If actual purchases differ from the estimates presented with your application, you may need to provide receipts or documentation. Some low-interest funding sources will require receipts to be submitted. When you sign the Promissory Note, you are agreeing to use the funding specifically for your child care business.

Nothing monthly. Once every three months, we will contact you (by phone or email) to ask about your current operation and confirm your license status. Once a year, we will send a survey so you can update us on any jobs and child care slots that you have created.