Today, the White House and Small Business Administration (SBA) announced new actions to support small businesses that offer child care for millions of working families. These announcements were made at a roundtable discussion with small business owners, lenders, and resource partners hosted at the White House by Director of the Gender Policy Council Jennifer Klein, Domestic Policy Advisor Neera Tanden, and Small Business Administrator Isabel Guzman. The new actions include:
- Funding Opportunities to Support Small Businesses in the Child Care Sector. In the coming months, SBA will make available new funding opportunities to support small businesses in the child care sector through SBA’s Women Business Center (WBC) program. WBCs are a part of a national network of entrepreneurship centers designed to assist women in starting and growing small businesses. The additional funds will support the expansion of child care delivery systems, increase child care slots, and improve child care access, affordability, and quality.
- Development of a Child Care Guide. SBA announced it will make funding available to create a child care business development guide, which would provide resources on starting and running a business throughout the child care business life cycle, including information on accessing capital, licensing requirements, and tax considerations.
- Lender Campaign. SBA is launching a lender campaign to highlight the resources SBA has available to support small, minority-owned, and women-owned businesses, including child care businesses. As part of this campaign, SBA will discuss with stakeholders the potential for additional reforms to support the growth of child care capacity across the country, including the expansion of eligibility to nonprofit child care providers under the signature 7(a) loan program, which supports financing to small businesses for working capital and a range of other uses, and the 504 loan program, which provides financing for major fixed asset purchases.
The roundtable kicks off the Biden-Harris Administration’s “Month of Action on Care” in April, which the President designated Care Worker Recognition Month last April when he signed a historic Executive Order on Increasing Access to High-Quality Care and Supporting Caregivers, directing nearly every cabinet-level agency to expand access to affordable, high-quality care and provide increased support for care workers and family caregivers. As the cabinet-level agency dedicated to supporting small businesses, SBA plays a critical role in these efforts. Under the Biden-Harris Administration, SBA lending for child care businesses has increased by more than $200 million and is up nearly 10% compared to the same period in the previous Administration.
The announcements made today are part of President Biden’s economic agenda to address challenges in the care economy and answer the call for investments in the fragile child care industry, which faces numerous challenges impacting the country’s child care supply. Those interested in starting a child care business—95% of which are small businesses—often struggle to access credit and find the significant start-up capital necessary to begin operating. And once up and running, many child care businesses struggle to break even and keep their doors open—as most child care facilities operate on profit margins less than 1%.
The Biden-Harris Administration’s Record on Child Care
Since day one of the Administration, President Biden and Vice President Harris have been committed to addressing the structural challenges within the child care ecosystem, including low wages for workers, high costs for families, and inadequate supply of high-quality care. The President’s American Rescue Plan (ARP) not only helped keep over 225,000 child care providers open, but had a significant impact on the economy. According to the President’s Council of Economic Advisers, that investment alone brought hundreds of thousands of women with young children into the workforce, lowered child care costs per child by $1,250, and increased wages for child care workers by 10%.
Pursuant to the Care Executive Order, this Administration has taken a broad range of actions across different agencies to make child care more accessible and support child care workers. These historic actions include: steps to lower child care costs for military families; a proposal to increase pay for Head Start teachers; sample employment agreements to ensure domestic care workers and their employers understand their rights and responsibilities; and a final rule that will lower child care costs for over 100,000 families that rely on federal child care assistance.
Finally, the President’s commitment to care is reflected in his most recent budget. The Fiscal Year 2025 Budget, released earlier this month, proposes major investments to increase accessibility and reduce child care costs, guaranteeing affordable, high-quality child care from birth until kindergarten, with most families paying no more than $10 a day and the lowest income families paying nothing at all.
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