Childcare Business Loans

Written by Richard Wilcock | August 26, 2026

Table of contents

• How to start a childcare business
• What do you need to open a nursery?
• Funding for nursery businesses: types of loans you can apply for
• Am I eligible for a childcare business loan?
• How it works
• Apply for a childcare business grant or loan today

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How to start a childcare business

To open a new childcare or nursery business in the UK, you’ll need to plan carefully and maintain strict regulatory compliance. Here are five steps to take initially:

1. Conduct local market research

Analyse local birth rates and existing nursery capacities (including waiting lists). This research will help you measure demand in your area.

2. Choose your business operating model

Are you opening up as a home-based childminder? Or perhaps you want to join a franchise? Take the time to decide which makes the most business sense for you.

3. Register your business with regulatory bodies

You must register with Ofsted and meet EYFS (Early Years Foundation Stage) standards.

4. Find and renovate your premises

You need premises with suitable indoor and outdoor space, and don’t forget about space for parents to drop their children off.

5. Access business funding

Apply for a childcare or nursery business loan early to give you working capital to cover renovation costs, employee wages, any equipment, and insurance payments.

What do you need to open a nursery?

Without a doubt, you need the relevant qualifications to look after children and suitable premises, but what else do you need?

• Ofsted registration and DBS checks. You need enhanced DBS (Disclosure and Barring Service) checks for all employees, including directors. And full Ofsted registration.
• Qualified key workers. You need a qualified nursery manager and other key nursery workers. Managers must have a minimum Level 3 in Early Years. And you must meet adult-to-child ratios.
• Essential equipment. You’ll need to purchase age-appropriate learning materials, sensory equipment, cots, safety equipment (such as gates), and any outdoor equipment.
• Compliant premises. Your property must have fire safety approvals, adhere to minimum space requirements per child, and have the proper planning use class (this is Class E(f) in England).
• Insurance and operational policies. As a childcare setting, you’ll need a comprehensive safeguarding policy, public liability insurance, and health and safety risk assessments.
• Working capital to start. While you market your setting and start enrolling children, you’ll need working capital to help you bridge any financial gaps between keeping the bills paid and waiting for your funding payouts.

Check your eligibility for childcare business funding

Checking won’t affect your credit score

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Funding for nursery businesses: types of loans you can apply for

Choosing the best small business loan for your business will depend on your goals and how quickly you need funds to meet them. But here are several loan types you could consider:

Unsecured business loans

If you don’t want to risk a high-value asset (i.e. commercial property), you can apply for an unsecured business loan to access the funds you need to cover initial costs like paying your rental deposit, renovating the property, or covering staffing and payroll costs; particularly if you need to recruit a whole team before you enrol children. With an unsecured loan, you can access up to £500,000.

Secured business loans

If you’re happy to provide collateral as security for your loan, you can apply for much higher loan amounts with a secured business loan (in excess of 2 million). If your new premises need considerable work, like structural safety upgrades, or you want to complete an entire refurbishment, or you’re considering expansion.

Startup loans

From just £500 to £2 million plus, a startup business loan helps you keep your cash flow positive in the early stages of business, so you can focus on accelerating your growth. Cover marketing costs, buy stock, or hire staff.

Asset finance

With asset finance, you can fund specific assets over time, which is particularly useful for childcare settings because there's a lot of equipment you need upfront. Asset finance helps you keep money in your business as you don't have the initial outlay and instead spread the cost of your operational assets over months or years.

Merchant cash advance

Once you've been trading for a few months and if you process customer card payments, you could apply for a merchant cash advance. An MCA can help you with short-term cash flow needs like covering unexpected repairs, launching a local marketing campaign, or replacing equipment.

Am I eligible for a childcare business loan?

Although lender eligibility criteria vary, most look for the following basic requirements:

• You have a UK registered business (limited company, LLP, or sole trader)
• You have a minimum trading history of between 3 and 6 months (you can apply for a startup loan as a brand new business)
• You must have a UK business bank account
• And you’re over the age of 18

Check your eligibility for childcare business funding

Checking won’t affect your credit score

Get Started

How it works

Applying for business finance through our free business comparison tool is quick and simple:

1. First, share what it is you’re looking for by filling in our short form
2. Compare eligible lenders in your own time from a single platform
3. Choose the finance option that suits you best and apply
4. Receive funds into your business bank account

Apply for a childcare business grant or loan today

You can find and compare trusted UK lenders today, with no obligation to accept any offer, and because we only conduct a soft credit check, getting a quote won’t affect your credit score. You can also use our free business grant finder tool to find eligible business grants.

Find and compare childcare finance.

About the author

Written by Richard Wilcock

Money Writer, Director and Co-Founder

Richard is one of the Co-Founders here at Capalona and has over 20 years of experience in the marketing industry, specialising in the finance sector.

Updated: August 26, 2026
Published: August 25, 2026