Virginia Bank Statement Loans for Daycare and Early Childhood Business Owners

Virginia’s Growing Need for Alternative Lending in Early Childhood Education

Childcare and early childhood education businesses are the backbone of a thriving community. In Virginia, these providers have seen unprecedented challenges and opportunities in recent years. As demand for quality care has risen, so has the need for facilities to expand, upgrade, or simply keep up with operational costs. However, traditional financing routes have proven insufficient for many of these business owners, especially those who are self-employed or operate under unique income models. For these entrepreneurs, bank statement loans provide a much-needed alternative.

Understanding Bank Statement Loans for Self-Employed Borrowers

Unlike conventional mortgages, which rely heavily on tax returns and W-2s, bank statement loans offer a solution tailored to self-employed professionals. With a bank statement loan, borrowers can qualify based on their monthly business deposits rather than net income shown on tax returns. This makes it ideal for daycare providers, who often reinvest in their facilities, take deductions for staff and supplies, or experience seasonal cash flow. These loans evaluate 12-24 months of bank statements—either business or personal—to determine a realistic income average.

Tailored Lending for Daycare and Early Childhood Business Owners

Daycare operators deal with fluctuating revenue streams due to enrollment cycles, tuition payments, subsidies, and grants. Traditional underwriting doesn’t always recognize the full picture of profitability in these businesses. With a bank statement loan, lenders consider gross deposits and consistent revenue patterns rather than taxable income. This flexibility is critical for early childhood business owners who may have strong, predictable deposits but little net profit due to strategic deductions.

NQM Funding’s Bank Statement Loan Programs

At NQM Funding, we understand the unique income structures of daycare professionals. Our programs include options such as 12- and 24-month business bank statements, personal bank statements, or P&L-only loans. These programs allow up to 90% LTV for primary residences and 80% for investment properties. The Flex Supreme and Flex Select programs are ideal fits, providing options for borrowers with strong credit histories and consistent deposit patterns. Minimum FICO requirements vary depending on LTV, but most loans can be structured without mortgage insurance.

Real Estate Ownership and Expansion in Childcare

Daycare providers often seek to buy or refinance properties used as educational facilities. Whether it’s a home-based daycare or a freestanding building, bank statement loans offer flexibility in loan purpose—purchase, refinance, or cash-out. Many business owners use cash-out options to fund expansions, remodel outdated classrooms, or pay off high-interest debt. NQM Funding supports these goals through Non QM Loans structured around the borrower’s real-world financial picture, not just their tax documents.

Daycare Business Trends in Virginia

Across Virginia, childcare businesses are booming in cities like Fairfax, Arlington, Virginia Beach, and Richmond. Population growth and increasing dual-income households have created a strong market for early childhood services. Local regulations require specific zoning and occupancy standards, which can impact financing and property valuation. Lenders familiar with local ordinances and childcare licensing requirements—such as NQM Funding—can provide critical insights to ensure a smooth loan process.

Why Traditional Loans Fall Short for Daycare Operators

Many childcare owners are denied by traditional lenders due to complex tax filings, deductions, or lack of W-2 income. Even successful businesses can appear “unprofitable” on paper due to aggressive write-offs. A Non QM Lender like NQM Funding evaluates alternative documents and understands the nuances of childcare income streams. This approach opens the door to financing for capable business owners otherwise excluded from the conventional mortgage market.

Benefits of Using a Non QM Lender Like NQM Funding

There are several benefits to working with NQM Funding:

• No mortgage insurance required, even at high LTVs.
• Common-sense underwriting that accounts for real business performance.
• Interest-only options for managing monthly cash flow.
• Prepayment flexibility.
• Options for cash-out refinance, allowing access to working capital.
• Quick turnarounds with the Quick Quote Tool.

Virginia-Specific Licensing and Compliance Considerations

The Virginia Department of Education oversees licensing for early childhood education. Regulations vary by locality, including Fairfax, Loudoun, and Henrico counties, and these differences can affect how properties are appraised or zoned. Lenders familiar with Virginia’s business property classifications will ensure financing is appropriate and compliant with all local and state requirements.

Steps to Secure a Bank Statement Loan with NQM Funding

The process is straightforward:

1. Use our Quick Quote Tool to assess your eligibility.
2. Gather 12 to 24 months of personal or business bank statements—or a recent P&L.
3. Work with an experienced broker to package and submit the application.
4. Upon approval, close your loan and deploy funds to enhance your childcare facility.

When to Consider a DSCR Loan for Childcare Facilities

For larger childcare centers or mixed-use properties with strong rental income, a DSCR loan may be more appropriate. These loans qualify based on the property’s income rather than the borrower’s personal income. This is ideal for business owners who lease part of their space or operate commercial childcare facilities. Learn more about DSCR options here.

How ITIN-Holding Owners of Virginia Daycare Centers Can Qualify

Many successful Virginia-based childcare providers are immigrants who operate under an Individual Taxpayer Identification Number (ITIN). These individuals may not qualify for conventional loans but are eligible through programs outlined in NQM’s ITIN Guidelines. This opens up funding opportunities for a diverse pool of business owners statewide.

Compare Bank Statement and P&L Loans

Bank statement and P&L loans are both designed for self-employed borrowers but differ in documentation. Bank statement programs rely on deposits, while P&L loans use financial statements prepared by a CPA or licensed tax preparer. NQM Funding offers both options, with the 2-Month Bank Statement program offering a quicker path for those with strong, recent financial performance.

Local SEO Tips for Brokers Serving Virginia Childcare Entrepreneurs

Mortgage brokers looking to generate leads from this niche should optimize their content using city-specific keywords like “Richmond daycare mortgage” or “Virginia Beach childcare loan.” Networking with daycare associations and attending licensing workshops can also position brokers as trusted financial partners in the community.

Expanding Lending Horizons for Virginia’s Childcare Professionals

One of the most overlooked facts in mortgage lending is how difficult it is for daycare and early childhood education professionals to qualify for financing. Many of these business owners operate sole proprietorships or S-Corps with write-offs that are fully legal but misleading to traditional lenders. Bank statement loans provide an inclusive path for professionals whose income is stable but reported differently than salaried W-2 employees.

The daily costs of running a licensed daycare—staff salaries, licensing renewals, curriculum materials, playground upkeep, food service, and transportation—require continual investment. These expenses may reduce taxable profit but do not diminish a business’s operational viability. Traditional underwriters rarely grasp this nuance. That’s why alternative documentation loans are more than a workaround—they are an essential tool for economic justice and practical lending.

Common Use Cases Among Daycare Operators

In Virginia, daycare owners often seek bank statement loans for these purposes:

• Purchasing larger or multi-use facilities as enrollment increases.
• Refinancing to access lower interest rates after initial startup financing.
• Consolidating personal and business debt into one mortgage structure.
• Using cash-out options to fund playground upgrades, curriculum tech, or ADA compliance renovations.

For instance, a daycare in Arlington may need to expand into a second building next door. If that purchase is denied by a conventional lender due to high expense ratios on the owner’s Schedule C, a Non QM Loan from NQM Funding could make it possible by focusing on gross revenue deposits.

Broker Advantages: Building a Niche in Childcare Lending

For brokers, working with childcare providers offers an under-served niche with stable income, high referral rates, and community impact. Virginia alone is home to thousands of licensed child care operations. Brokers who familiarize themselves with Virginia Department of Education licensing categories and property requirements will have a head start on underwriting prep.

Tips for Brokers:

• Visit facilities in person to understand how they operate and earn.
• Guide borrowers to keep their deposits clear of co-mingled funds.
• Recommend using business-only accounts to streamline bank statement reviews.
• Partner with CPAs familiar with early childhood education business models.

Understanding P&L-Only Options and Their Application

A profit and loss (P&L) statement may offer a faster route to qualification than 24 months of bank statements—especially for organized borrowers. This route is excellent for providers who use QuickBooks, have a bookkeeper, or who file monthly statements. It works well for rapidly growing businesses whose recent profits outpace their bank deposit history.

NQM Funding allows for P&L-only options with additional documentation from a tax preparer or licensed CPA, enabling faster processing. Many Virginia-based daycare operators take this route during expansion phases or after acquiring a second location.

Zoning, Appraisals, and Licensing: The Virginia Lending Terrain

In Virginia, zoning ordinances affect whether a property can be used as a daycare. For example:

• In Fairfax County, home daycares must comply with specific square footage and child capacity limits.
• In Virginia Beach, commercial childcare centers must meet fire safety and parking regulations.
• Appraisers must take licensing suitability into account when valuing properties used for early education.

These factors can significantly affect a loan file. Brokers should work with lenders like NQM Funding who understand these nuances and can request appraisals that reflect both business use and residential valuation where applicable.

Beyond Bank Statements: Supporting Documentation That Strengthens the File

Though bank statements are the core qualification method, supporting documents can strengthen an application:

• State licensing documentation shows stability.
• Enrollment reports validate demand and projected income.
• Subsidy approval letters (e.g., Child Care Subsidy Program) support future income expectations.
• Business tax IDs and articles of incorporation signal legitimacy.

Including these documents can lead to faster approvals and smoother underwriting.

The Value of Long-Term Relationships in Non QM Lending Unlike conventional lenders, NQM Funding aims to build relationships. Many Virginia-based brokers have returned year after year to help daycare owners refinance, expand, or purchase investment properties. Because NQM also offers DSCR and Foreign National products, brokers can provide continuity for clients with evolving needs.

This long-term view is especially valuable in industries like early childhood education, where word-of-mouth referrals among providers are powerful.

Daycare-Focused Lending FAQs for Brokers

Q: What is the minimum credit score for a bank statement loan?
A: Typically 620, but varies based on LTV and other compensating factors.

Q: How long must the daycare business be operational?
A: Usually 2 years. However, some exceptions exist if a new facility is an expansion from a successful related business.

Q: Can daycare owners use income from government subsidies?
A: Yes. Subsidy deposits reflected in bank statements count toward gross revenue.

Q: Are there restrictions on property types?
A: Single-family, mixed-use, and some commercial properties are eligible depending on loan purpose.

Q: Are ITIN borrowers eligible?
A: Yes, through ITIN-specific programs, provided documentation meets NQM Funding guidelines.

Call to Action: Serve Virginia’s Childcare Leaders

Mortgage brokers have an opportunity to make a meaningful impact by serving Virginia’s early childhood business owners. These professionals keep families working, communities thriving, and future generations learning. With Non QM Loans tailored to their needs, they can grow, expand, and build stronger futures. Start the process with a Quick Quote or learn more about bank statement loan options today.