The following data and information is from the results of a new survey conducted by the National Association for the Education of Young Children.

Small businesses are at the heart of the American economy, and the child care industry is at the heart of small businesses—as a support for the leaders and parents who run and work in them, and as a source of small businesses themselves. The child care system, which thrives on multiple types of programs and settings that meet parents’ and children’s needs, primarily consists of small centers and family child care homes run by
women, often women of color. According to the Committee for Economic Development, there are approximately 675,000 child care businesses in the United States.

Significant steps have been taken by Congress to assist small businesses of all kinds during the pandemic, including the creation of the Paycheck Protection Program (PPP). In the time since the program’s creation, the National Association for the Education of Young Children (NAEYC) has conducted webinars and created resources for educators and program owners, supporting them to learn more about and apply for the PPP opportunity.

NAEYC’s survey report from April 17 found that, of 5,000 respondents, 53% of child care centers and 25% of family child care homes had applied for the PPP loan. Additional programs have likely applied since that time; others have chosen not to apply because of expressed concerns around the risk of taking on debt in the context of an uncertain future. Of the programs who had applied, nearly 500, from 42 states and Washington, DC responded to a follow up survey seeking to learn more about their experience with the Paycheck Protection Program. In this slice of the child care industry, we can see that while the PPP has bought some programs critical time with which to pay themselves and their employees and cover some of their fixed costs, entire segments of the market, particularly family child care homes, have been essentially unable to access the program and its benefits. Additional, substantial, direct federal relief is needed to ensure child care exists and is available to support children’s learning and families’ return to work over an extended period of time.

Key Findings

• Of the half of child care programs who reported that they applied for the Paycheck Protection Program, half of those were approved for the loan; this would be equivalent to approximately one-quarter of the child care market receiving PPP loans.
• At the time of their response, 12% of those who had applied had been denied and another 33% had not heard back yet.
  • Of those who were denied, 55% were family child care home.
  • The most common explanations programs were provided for their denials, in addition being told there was a lack of funding, included problems with their credit scores and their lack of a business checking account (even if they had a personal account)—neither of which are required by the SBA to qualify for the loans.
• Rates of approval were slightly higher for borrowers who were previous clients of their lender (57% approval rate for previous clients vs. 49% approval rate for applicants who were not).
  • For family child care homes, approval rates were lower regardless of previous client status; if they were clients, they confronted a 27% approval rate, while those who were not previous clients saw a 23% approval rate.
• Reflecting the range of small business settings and size in the child care field, the amount of the loans varied significantly:
  • 38% of respondents reported that their loan amounted to less than $50,000
  • 25% reported that it amounted to between $50,000 and $100,000
  • 30% reported that it amounted to between $100,000 and 150,000
  • 6% reported that it amounted to between $250,000 and $500,000
    • All of the family child care homes reported a loan amount of $50,000 or less.

Ensuring forgiveness for the programs who received the loan will be the next challenge; many child care providers, even those who ultimately applied in the hopes of saving their businesses so they could continue to serve children and families in their communities, expressed deep concerns about the risks of taking on debt, and were fearful that the loans would not be forgiven.

To the extent that additional funding and policy changes are coming for the Paycheck Protection Program, NAEYC encourages Congress and the Small Business Administration to make these funds increasingly available to true small businesses, such as family child care homes, who are sole proprietors and may be unbanked, and to provide guidance to the banking industry clarifying expectations around loan and forgiveness requirements. At the same time, even a fully functional and funded Paycheck Protection Program would not be enough to sustain the existence of the mixed-delivery child Care system that is needed to support the nation’s response to disaster and road to recovery. The viability of child care programs—and therefore the viability of our nation’s economy—is dependent on substantial, additional, and direct investments, and we look forward to working with Congress to make these investments a reality.

OVERVIEW

In addition to the proven benefits to a child’s learning and healthy development, quality child care is an essential pillar of America’s labor market and economy, making it possible for millions of parents to go to work or attend school each day. The nationwide Coronavirus crisis has hit the child care industry – both center-based care and family child care alike – especially hard, causing widespread layoffs and closures as a result of catastrophic drops in enrollment. Extended closures during this time could put a substantial percentage of them out of business permanently, exacerbating the existing realities of child care deserts. Child care closures will hit families of color, rural areas, and low-income neighborhoods especially hard, as these communities already had an undersupply of quality, affordable child care. At the same time, child care providers still working or reopening will have to operate on financial losses for months as a result of new social distancing requirements and low enrollment, as parents slowly return to work. The devastating impact of these realities cannot be sustained without direct federal investments that ensure child care providers can keep their doors open to meet the needs of working families. Without question, America’s economic recovery from the COVID-19 crisis will depend on whether the child care industry survives.

CHILD CARE AND THE COVID-19 CRISIS

After months of uncertainty and the potential for extended business closures, the strain being placed on our child care providers, who are already operating on razor thin margins, could force many out of business permanently.

Half of the nation’s child care providers are closed as a result of the COVID-19 crisis and say they won’t survive a closure of more than two weeks without significant relief. That loss of child care supply could result in a permanent loss of nearly 4.5 million child care slots.

While most parents know their children in K-12 will have a school to eventually return to, the same cannot be said for parents with children aged 0-5.

A recent Bipartisan Policy Center survey showed two-thirds of parents who still need child care are having difficulty finding it. Further, about half of parents are concerned their provider would no longer be open when they are able to return to work.

We know the economic recovery in our country will be a slow, phased process, and yet child care providers must be open and ready for families in order to begin the recovery process. This means:

• Child care providers still operating or reopening, will have to operate on financial losses for months to come due to new social distancing requirements and low enrollment as parents slowly return to work.
• Providers will also face increased supply expenses for safety and sanitation materials for the foreseeable future.

The devastating impact of these financial realities cannot be sustained without direct federal investments that ensure child care providers, both center-based and home-based care, can keep their doors open to meet the needs of children and families.

There is no denying, if child care providers remain closed and the industry collapses, working parents won’t be able to return to work and our economic recovery will suffer.

THE NEED FOR DEDICATED FEDERAL RELIEF

As our country moves through the various phases of recovery and reopening the economy, no industry will be able to restart if the child care industry collapses and a big portion of the labor force no longer has access to reliable, high-quality child care they depend on to be able to go to work. This will disproportionately impact working mothers, who support their families’ financial security as breadwinners and contribute to the size of the overall economy. While the Paycheck Protection Program has helped a small fraction of child care providers stay afloat for a short time, it is not designed to meet the unique needs of child care providers who must operate on financial losses for months to come as parents slowly return to work. Therefore, substantial, direct, and targeted federal support for child care is essential for the future of the industry.

Congress must take additional steps to provide substantial, direct relief to meet the unique needs of our nation’s child care providers and the families they serve to:

• Stabilize the child care industry during the pandemic as stay-at-home and social distancing measures limit revenue and threaten the collapse of the industry.

• Guarantee the child care programs that are choosing to stay open during the crisis have the necessary support so that essential and front-line workers can access care – and that the children attending these programs continue to receive high-quality services.

• Ensure child care providers have the support they need to operate and be available for children and families as states re-open.

Our nation’s long-term well-being depends on a child care infrastructure that works for every family. An abundance of quality, affordable, child care is fundamental to our economic recovery from the pandemic and beyond.

Our nation’s long-term well-being depends on a child care infrastructure that works for every family. An abundance of quality, affordable, child care is critical to our economic recovery now and in the future. Moreover, we know that high-quality child care isn’t just essential to the workforce of today—it also drives academic achievement and other measurable short- and long-term improvements to health and social development in children that prepare our skilled workforce of tomorrow.

The COVID-19 crisis has had a tremendous and disastrous impact on child care across the country – affecting both child care providers and the families they serve.

Take a look at the impact this pandemic is having on child care in the states:

The information included in these resources includes data from Bipartisan Policy Center, the Center for American Progress, Child Care Aware of America, and the National Association for the Education of Young Children.

More state resources will be added over the coming days as data becomes available.