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Finance Questions

At ANZ, there are a number of questions we are frequently asked in relation to childcare centre finance, so here are some answers to get you started. This is far from a comprehensive guide, so if you have further questions, please contact us to discuss you individual needs.

How much can I borrow to purchase an established Childcare Centre?
ANZ will typically lend up to 70% of the value of the Freehold Childcare Centre, or 50% of the value of a leasehold childcare business. This may vary depending on your actual level of profitability and cash flow, and whether you have additional security to support a higher level of funding.
Can I borrow to buy or start up a Childcare Centre?
Yes! ANZ does provide funding for new Childcare Centres, including land purchase and building construction, purchase of a turnkey centre ready for operation, or the fit out of a new leasehold centre. The loan to value ratio (LVR) will usually depend on the type of centre being developed, and you will need to speak to a specialist manager to discover the range of finance options available, including the level of contribution you will need to make the development. This is my first Childcare Centre purchase, will a bank still give me finance?

Acquiring your first Childcare Centre is an exciting time, and we also get excited when helping our clients into their first centre. However we are also aware of the challenges that new business owners face, and for that reason, you will need to have experience in managing a centre to be considered for finance approval. Ideally you should have a minimum of 2 years experience as a centre director, managing the day to day operation of a Childcare Centre.
What information will I need to provide to the bank?
At ANZ we make it our business to get to know yours, in order to provide specialist advise and the best possible solution for your individual circumstances. That’s why your manager will visit the centre and ask you about QIAS Accreditation, licensing, occupancy, staffing and your competitors to not only understand your business today but recognize its future potential.

Of course we’ll need all the usual financial facts and figures, including trading figures for the past 2 years (yours or the vendor’s), contract of sale if you’re purchasing a new centre, personal tax returns for company directors, cash flow forecasts if I is a start up venture and information on any security to be provided.
Do I need to prepare a business plan?
If you’re purchasing a turnkey centre or constructing a new centre, then an in depth business plan is crucial. Even if you’re already operating a centre or are purchasing an established business, a business plan can be a great management tool to map out all of your ideas and devise a long term strategy for your centre to help you and your bank understand where your business is heading.

It doesn’t have to be too complicated, but should include issues such as your business objectives, performance measures, and timeframes and cover topics such as pricing, competitive advantages, marketing, ongoing accreditation & licensing and property issues such as fit out or lease renewals.
Do I need to speak to a child care specialist, or will any business banking manager be able to finance my centre?
Whilst any bank may be able to lend you money for your centre, speaking to an ANZ Specialist will mean your finance is best structured to maximize your business’ potential. The expertise and special advise of a dedicated childcare manager may even proved you with suggestions and opportunities you never thought possible. How long will it take to arrange finance?

Once you have provided all of the documentation, it will take around 5-10 days to asses your application. Your specialist childcare manager will contact you during this time if any further information is required. Following this your manager will advise you if your application has been successful and will explain any further conditions such as further documentation that may be required. Following your acceptance it will take around 3-5 working days to prepare security documents, and ensure you allow time to have documents signed by any third parties required, such as your landlord or previous bank. Once all documentation has been returned to the bank your settlement date can be confirmed.

All up, you should allow at least 4 weeks from initial application through to settlement of a new Childcare Centre purchase, so make sure you begin discussions with your bank early to avoid delays.
How will my business be valued?
Yes. However you should only get a valuation completed once you have spoken to your bank manager, as not all valuers are accredited for lending purposes. Talk to your manager and they will be able to advise which valuers are acceptable and will be able to arrange a valuation for you.
Do I need to get a valuation of the childcare business?
A bank accredited valuer with expertise in the childcare industry will examine your Childcare Centre’s physical aspects as well yours or the vendor’s financial statements to determine its current and future maintainable earnings potential. The valuer will inspect your centre and assess internal factors associated with your centre, such as the building layout, the quality of fixtures and fittings and the trading hours as well as the external environment which will impact the ongoing viability of the centre such as competitors and local area demand for childcare.

After visiting your centre, the valuer will complete some financial analysis on the trading history of the centre and any forecasts or business plans to validate income potential of the centre and operating costs, which may be adjusted to exclude any abnormal items. This future earnings potential will then be capitalized to reflect the market rate of return on investment and verified with a comparison to recent sales of similar childcare businesses.

For more information and if you would like us to ring you back, please complete the online enquiry form found on our website

All applications for credit are subject to ANZ’s normal credit approval criteria. Australia and New Zealand Banking Group Limited (ANZ) ABN 11 005 357 522. ANZ’s colour blue is a trade mark of ANZ.

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