Loan Programs

Forgivable Child Care Loan Frequently Asked Questions

Who is eligible to apply?

Any new or existing child care that is licensed in the following counties:  Becker, Clay, Douglas, Grant, Otter Tail, Pope, Stevens, Traverse, or Wilkin is eligible to apply for the FCL Program.  A Rule 2 non-profit would also be eligible, as are for-profit child care centers. 

I am not licensed yet, are there any other programs for me?

This is the correct program for you, too.  To qualify for the FCL, you need to be in the process of getting licensed through your respective county licensor.  If you are in the process, you can apply for the program, and WCI will work with you on timing so you can get the funding available through the program.

I have a Rule 2 (county licensed) child care license, but operate a child care out of a commercial building, or a house that is not my residence, can I apply for funding?

Yes, while the funds cannot be used to purchase a residential property, you are eligible to apply for funds for needs within the child care space.

Is this a grant?

While there are no monetary payments required as long as the terms of the loan are met, it is not a grant.  As a non-profit, WCI is not permitted to provide grants to for-profit business or individuals.  For the duration of the loan, you will receive a 1099 at the end of the calendar year for the amount of the loan forgiven in that year.  The amount reflected in the 1099 is counted as income and may have tax implications that you should discuss with your accountant/tax preparer. 

You will hear the term “borrow” and other terms commonly associated with borrowing money frequently as part of this process. Even if the payments are forgiven, this is still technically a loan program. 

How much can I borrow and what are the terms?

The maximum amount that can be borrowed is $3,500.  The interest rate is 0%, and the loan term is 3 years for that amount.  As long as you provide licensed child care during the course of those 3 years, a portion of the principal balance is forgiven each month.

Can I borrow less than the $3,500?

Yes, the minimum you can borrow is $1,250 and that amount requires you to provide licensed child care for 1 year and is forgiven over that time.  If you borrow between $1,251 and $2,250, that amount is forgiven over 2 years while providing licensed care for that time.  From $2,251 to $3,500 the amount is forgiven over 3 years.    

What happens if I decide to close my child care prior to the loan being fully forgiven?

The remaining principal amount of the loan will need to be paid back at, the monthly payment rate indicated on your payment coupon.  The amount already forgiven will not have to be paid back. 

How will maternity leave or other reason for extended temporary closure of the child care affect my payments? Do I have to send actual payments for the time I am closed?

No actual payments will be required during that time. Depending on the amount of time you are temporarily closed, the loan may be extended, but WCI will work with you as each case is different. 

How can the money be used?

The program is intended to be used to make the home suitable for child care.  Funds can be used to make licensor or fire inspector required improvements to the home; that includes things like handrails, egress windows, fences, smoke and carbon monoxide detectors, fire door, and other  safety improvements.  The funds can also be used to purchase toys, books, equipment, and supplies for the child care.  In some cases the cost of attending training to maintain your license is also an eligible use of funds.  WCI reserves sole discretion to determine if the use of the requested funds is eligible.

If there is any question about what is eligible, please do not hesitate to ask.  This is not a comprehensive list, and there are a lot of other eligible uses.    

Can I use the funds towards finishing a space in my home?

If the space is being finished to qualify it to be a licensed area for the child care, then yes, the funds can be used to offset the costs to finish the space.

What about using the money to replace flooring or other home maintenance?

In short, no; this program is not intended to be used for home maintenance projects.  While we recognize that the day-to-day use of the home for child care has impacts on the home, projects that have too much of a connection to normal home maintenance and improvements don’t qualify for the program.  This includes room remodels, siding and roofing, driveway paving, decks, HVAC, water heaters, kitchen appliances (in the home’s primary kitchen).  Exceptions can be made if the project is being required by the licensor as a safety matter.  WCI reserves sole discretion to determine if the use of the requested funds is eligible.

I recently opened my child care and incurred some costs related to the startup.   Can I use the funds to reimburse eligible costs or payoff/down a loan I took out?

If you incurred those costs within the last 12 months from the date of applying and your request is approved,  you are permitted to direct the money to payoff or pay down a loan (as long as the loan was specifically related to establishing your child care) or reimburse yourself.  You should include receipts or other proof of those costs with your application.  Be sure to discuss this strategy with your accountant/tax preparer to be aware of tax implications.  

What is the process to apply?

Completely fill out the Forgivable Child Care Loan application and provide all requested documentation outlined in the application.

Does my credit rating impact your decision?

While we will review your credit as part of the underwriting (application review process,) a credit score is not a sole determining factor for a decision to approve or deny your request. 

Do you require collateral?

This is an unsecured forgivable loan, which means we will not require you to provide any collateral. 

How long does it take to get the funding?

Although we make every effort to review and make a decision quickly, the application review can take up to two weeks, but in some cases may take longer.  If you are approved, a closing date is usually scheduled no more than 20 days of approval, but again we make every attempt to accommodate a quicker turnaround.

Do I need to close my child care to go somewhere for the closing?

We bring the closing to you.  Ideally, the closing is scheduled during nap time, and usually only takes about 15-20 minutes.  We will do our best to be flexible to your schedule. 

Are there any fees or costs as part of this program?

At closing, WCI will require payment of a 1% origination fee (for example:  $35 if you request $3,500) and reimbursement of the cost of your credit report which is just over $6.  You will be notified of the specific amount prior to closing.  If you are a Parent Aware rated provider, or are pursuing a Parent Aware rating, the closing costs will be waived.   http://parentaware.org/providers/

How much funding is available? 

This is actually Phase 2 of the FCL Program.  WCI initially provided funding to 20 child care providers across the region during the summer and fall of 2016 out of our existing loan fund.    Through a matching grant provided by the State of Minnesota and again the use of more WCI funds, we will be able to provide funding for approximately 29 additional child care providers. 

I am waiting on getting some of the information into my application, should I submit it incomplete as a placeholder for funding?

The program is on a first-come, first served basis.  If your application is deemed incomplete, you will be promptly notified of what else needs to be provided, but an incomplete application does not serve as a place holder for funding, nor does a completed application indicate you will automatically be approved.   It is highly recommended that you contact Greg Wagner directly to review details of your request and any questions you may have prior to submitting. 

If I get approved for the funding do I have to submit receipts on what I purchased? 

No, since this is not a grant, we are not requiring receipts on expenditures (unless requesting for already incurred costs which then need to be included as part of the application.)  When you sign the Promissory Note and Commitment Letter, you are agreeing to use the funding specifically for child care. 

Is there something I need to send in monthly to prove I am still providing licensed child care?

Yes, at closing you will receive a coupon book with monthly stubs.  There is a spot on the stub where you check you are still providing child care and no payment is required.  That needs to be mailed in monthly. 

WCI staff will also be in contact with the county licensors to annually check that you are still licensed to provide child care in the county.