CDFI Loan Application Package

Unity Childcare Center LLC is a licensed childcare facility in Newark, New Jersey, serving low-to-moderate income families in the city's Central Ward. Founded in 2020 by Priya Washington, the center provides full-day care for children ages 6 weeks to 5 years, with a current enrollment of 62 children across 45 families. The center employs 8 staff members and generated $360,000 in annual revenue in 2025, with a net operating margin of 11.7%.

Unity Childcare is requesting a $75,000 CDFI loan to fund critical facility improvements and bridge a seasonal working capital gap. The funds will be deployed toward playground safety upgrades mandated by updated licensing requirements ($25,000), renovation of two classrooms to increase licensed capacity by 12 spots ($28,000), and three months of working capital to cover the summer enrollment dip ($22,000). The capacity expansion will enable the center to serve 8 additional families and create 2 new part-time teaching positions.

While the owner's credit score of 620-650 falls below conventional lending thresholds, the business demonstrates consistent viability: 6 years of continuous operation, 12% year-over-year revenue growth, 92% average occupancy rate, and zero months of missed rent or payroll. The center operates in a CDFI-designated target area where the nearest licensed childcare facility is 2.3 miles away, creating a documented gap in access for families without reliable transportation. 80% of enrolled families use NJ childcare subsidy vouchers, providing a reliable, government-backed revenue stream.

Unity Childcare Center operates from a 3,200 sq ft leased facility on MLK Boulevard in Newark's Central Ward. The space includes 4 classrooms (infant, toddler, preschool 1, preschool 2), a kitchen, administrative office, and outdoor playground. The center is licensed by the NJ Department of Children and Families and participates in the Grow NJ Kids quality rating program (currently rated 3 of 5 stars). The lease runs through 2029 with a 5-year renewal option.

Unity Childcare Center has served the Central Ward of Newark for 6 years, providing affordable, quality childcare that enables parents to maintain employment. The center fills a critical gap: Newark's Central Ward has one of the highest childcare deserts in Essex County, with only 0.18 licensed slots per child under 5. Without Unity, many enrolled families would face a choice between unreliable informal care arrangements and leaving the workforce entirely.

80% of enrolled families use state childcare subsidies, and the remaining 20% pay on a sliding scale based on household income. No family has been turned away solely for inability to pay. The center maintains partnerships with Newark Workforce Development, Essex County College's early childhood education program (providing student-teacher placements), and the Newark Community Health Centers (providing on-site developmental screenings twice annually).

The requested loan will fund playground safety upgrades to meet updated NJ licensing requirements, classroom renovations that add 12 additional spots (bringing licensed capacity to 77), and working capital to bridge the summer enrollment dip when subsidy reimbursements slow. The capacity expansion will serve 8 more families and create 2 new part-time teaching assistant positions, bringing total employment to 10.

Revenue has grown 26% over two years (12.6% CAGR), driven by increased enrollment and a 4% state subsidy rate increase effective July 2024. The 81% gross margin reflects the low direct cost structure of childcare operations, where the primary expense is labor. Net margin after owner draw is improving steadily as enrollment approaches licensed capacity.

Industry benchmark: childcare centers nationally average 5-10% net margin. Unity's improving trajectory from 1.8% to 5.1% positions the business within the normal range for a maturing center.

The working capital component of this loan ($22,000) directly addresses the seasonal cash flow gap. During summer months, enrollment drops as school-age siblings leave and some families adjust schedules. Subsidy reimbursements also lag 30-45 days, creating a timing mismatch between expenses (payroll runs continuously) and revenue. The working capital reserve ensures payroll continuity through the 3-month seasonal dip without drawing on personal credit.

Unity Childcare launched in June 2020, during the height of the COVID-19 pandemic, and survived a period when many childcare centers closed permanently. The fact that the business achieved profitability by Year 2 and has maintained 6 years of continuous operation with zero missed obligations speaks to operational resilience. The owner's credit score reflects personal financial challenges common in the community served, not business mismanagement. The center has never missed a lease payment, payroll, or vendor obligation.

DSCR before owner draw is 2.65x, well above CDFI thresholds. After the full owner draw of $3,500/month, DSCR drops to 0.81x. However, CDFI lenders evaluate this differently than conventional banks: the owner draw is discretionary and can be reduced during tight months. Ms. Washington has demonstrated willingness to reduce her draw during the summer seasonal dip. The post-expansion revenue from 12 additional spots ($48,000-$60,000/year) will improve DSCR after draw to approximately 1.4x by Year 2.

Priya Washington, Owner and Director, holds a Bachelor's degree in Early Childhood Education from Rutgers University-Newark (2012) and a NJ Department of Education Preschool-Grade 3 teaching certification. She spent 7 years as a lead teacher and then assistant director at Bright Horizons in Montclair before founding Unity Childcare in 2020.

Ms. Washington completed the Rising Tide Capital Community Business Academy (2019), a 12-week entrepreneurship training program specifically designed for community-based business owners in Newark. She holds current CPR/First Aid instructor certification, is NJ-credentialed as a Center Director under the state's Workforce Registry, and serves on the Newark Early Childhood Advisory Council.

Her team includes a lead infant teacher (6 years experience, CDA certified), a lead preschool teacher (8 years experience, BA in Education), and an assistant director who handles billing, subsidy paperwork, and parent communications. All staff complete a minimum of 20 hours of annual professional development as required by NJ licensing.

*Year 1 shows break-even after all obligations as the capacity expansion ramps up enrollment. By Year 2, the center generates positive net income after full draw and all debt service. Revenue growth is driven by 12 additional enrollment spots and anticipated 3% subsidy rate increases.