daycare providers find relief in loan programs

By Gus Bode

DCFS Guidelines work to insure quality of centers

More than a year ago, building problems plagued Puka School. Bad plumbing, basement regulations and ceiling problems sent the school’s board of directors looking for a new daytime home for its 50 children.

When the board found its future location on South Wall Street in Carbondale, a new problem arose:funding. After looking at a variety of options, they chose to get a loan from the Illinois Facility Fund.

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As more and more daycares in Southern Illinois drop off the radar, the State Treasurer’s Office and IFF are offering low-interest loans to counter the rising costs to build. Once providers secure a loan, guidelines set out by the Department of Children and Family Services help them become licensed and on their way to opening a new daycare.

IFF is one choice for current and potential daycare owners. They offer loans for facility acquisition, space improvements and construction projects. The loans are given out at a below-market interest rate and with lower or nonexistent fees, which makes them very appealing to nonprofit organizations.

“Every step of the lending process from approval through closing is designed for the way nonprofits operate,” said Robin Toewe, marketing communications manager at IFF. “This is very different because that is our only target audience.”

Approval for the loans is not based on the property’s appraisal, because many times non-profit organizations can be in low-income neighborhoods and therefore bring a very small property value, said Toewe. They base it on the organization’s experience and projected revenue. Loans can range from $10,000 to $1 million. The amount of the loan and the below-market rate depend on the client.

Puka was able to secure a loan from IFF that was good for 30 years. Toewe said the standard loans are for one to 15 years. Through their new location, it enabled them to more than double their capacity from 50 to 107 children. On average, they care for 90 children.

“Despite the guidelines set for our program, we do what is best for the client,” Toewe said.

The state treasurer’s office offers a loan program specifically for day-care providers. Since its inception in 1999, the Day Care Initiative program has invested $18.7 million in daycare. Through those dollars, 6,625 children have been served in daycares the program has financed. They have funded 75 projects throughout the state and have at least one project in almost every county.

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The program’s loans begin at a low 1.6-percent interest rate, but they cannot loan money directly to the lender. Instead, they have to deposit the money into a local financial institution, which is allowed to add only 3 percent above that. In the end, day-care providers can receive a loan at a maximum interest rate of 4.6 percent. The program is a part of many other link-deposit programs that are offered through the treasurer’s office.

“The primary objective of the program is to create new spaces or slots in daycare,” said Michael Smith, project manager. “If it is an existing daycare, then we just ask that they raise their capacity.”

Lenders can use the program three ways. They can use it for property acquisition, construction or to purchase equipment such as computers, kitchen appliances or vehicles.

Ken Yordy, licensing supervisor of the Department of Child and Family Services, said when starting a daycare expenses can be minimal, depending on how much equipment needs to be bought.

At IFF, the low interest rate can fluctuate depending on the terms agreed by the client. The day-care initiative guarantees the low rate for the first five years of the loan, but if the loan is extended beyond that, the lender must pay the rate that is offered by the bank.

“Since the first five years are the most critical to any business adventure, the idea for the program is that it makes those first five years a little bit easier,” Smith said. “That allows them save money on interest rates to put toward other things like payroll, keeping the lights on or whatever the expenses might be.”

Once potential day-care providers secure a loan for their project and the building or addition is built, the next step would be to make sure everything is in line with the guidelines of the Illinois Department of Children and Family Services.

If a person wishes to open a daycare from a home, the owner must operate from a family home, where they must live full time. The maximum number of children allowed in a day-care home is 12, but a definite number of children would be determined case by case. There is no fee to receive a license from DCFS, but charges may apply for local permits.

“Day-care homes were basically set up to more or less monitor babysitters to make them a little bit more professional and responsible,” Yordy said.

Slightly larger homes are called group day-care homes. Group day-care homes can have a capacity of 16 children if assistants are hired. The owner must have more than 600 hours of experience or have evidence of some training and hold liability insurance for the children.

A day-care center operates from an official building rather than a residence, and all directors must have degrees in childcare. While most homes are not inspected for fire code violations, centers must be examined for fire and plumbing breaches. Directors must have a degree in child care. All owners and directors must be certified in first aid and CPR.

Once all requirements are fulfilled for the licensing process, applications should be completed within 90 days. Completion may take longer if applicants have a criminal background. As a part of the process, DCFS will check records such as criminal history, Illinois Sex Offender Registry, DCFS Child Abuse/Neglect Registry and FBI records. If an applicant does have a criminal record, more serious infractions may exclude him or her from receiving an affirmative from DCFS.

Puka has been settling into their new home for a little more than a year now. While the school may be paying off their loan for the next three decades, the children will come and go with no knowledge of their school’s struggle to stay alive. Naptime and storytelling and recreation will begin at 7:30 a.m. every day, and when the parents pick up their weary children in the evening, it will be the contributions of numerous agencies and dedicated owners and directors that provided the children with such an environment.

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