search icon

FCF Analyzes Financing in Nebraska

“The work we did with First Children’s Finance is informing our organizational growth plan and will help us achieve our goal of equitable access to capital not only for Nebraska’s child care providers, but the child care industry as a whole. I can’t say enough good things about the competence and depth of knowledge specific to the child care industry that FCF has demonstrated throughout our partnership.”

Shannon Cotsoradis
Chief Executive Office, Nebraska Early Childhood Collaborative

How Do Child Care Businesses Access Capital in Nebraska?

Throughout the early months of the COVID-19 pandemic, child care businesses struggled mightily. The Nebraska Early Childhood Collaborative was seeking a way to support child care businesses systemically and meaningfully to not just stabilize, but to sustain themselves, now and into the future. They observed the rollout of the Paycheck Protection Program (PPP), and how many child care providers in Nebraska did not apply or were not successful in their applications to receive this emergency funding. The challenges these businesses faced when accessing grants and loans for pandemic relief highlighted the disparities that child care businesses face when attempting to access capital from traditional financial sources. Larger businesses and businesses with an easier-to-understand business model were accessing PPP loans and emergency funding while child care businesses were being left with nothing. NECC decided to step up and step in!  

Shannon Cotsoradis, Chief Executive Officer of Nebraska Early Childhood Collaborative, reached out to the First Children’s Finance National Team directly in late spring 2020 to discuss the different ways their organization could facilitate access to capital for child care businesses. From Fall 2020 to Spring 2021, First Children’s Finance (FCF) worked with the Nebraska Early Childhood Collaborative to map the capital landscape for child care entrepreneurs throughout Nebraska to determine what capital was available, who knew about it, and who was successful in accessing it. The FCF National team was excited to bring their years of research, outreach, and innovative thinking to the project.  

What Happened Next?

FCF conducted a landscape analysis specifically aligned to Nebraska Early Childhood Collaborative’s vision, mission, and the priorities that were important to their organization, including: 

  1. Ensuring equitable access to capital 
  2. Developing new and innovative strategies to increase access to capital  
  3. Reducing the number of child care businesses that close due to financial crisis  
  4. Reducing administrative burden for child care business owners when accessing capital  
  5. Targeting investments to where they will be most effective.

FCF conducted research to identify the types of capital available and how they compared to the needs of child care businesses, as well as how and when the businesses are considered creditworthy by financial institutions. The analysis included an exploration of whether or not entrepreneurs have the time, capacity, and support to learn about and access available sources of capital.

The research focused on conventional and nonprofit banks, state grants, philanthropy, and economic development funding programs. FCF also analyzed recent COVID-19 relief grant and loan programs for lessons that could inform future initiatives. 

FCF confirmed some suspicions and uncovered new information throughout the landscape analysis. The findings below were used to inform the recommendations that FCF shared with Nebraska Early Childhood Collaborative.

In Nebraska, child care businesses have access to capital from banks, the state, economic development projects, and philanthropy but encounter the following obstacles: 

  • Limited Lending from Conventional Banks  
  • State Grants Go Unspent  
  • Philanthropic Support is Rare in the For-Profit Child Care Sector 
  • Leveraging Economic Development Funding is a Promising but Underutilized Approach 

What Did First Children’s Finance Recommend?

FCF made the following recommendations to Nebraska Early Childhood Collaborative to support their goal of creating effective, equitable pathways to capital for child care businesses in Nebraska: 

  • Create a Team of Capital Navigators: Provide holistic support that takes into consideration entrepreneurs’ personal finances, experiences, and ability to access capital; the wide array of available funding and community resources; and the development of sound child care business models within a community’s context and demand for care. While many organizations fill a piece of this puzzle, there is tremendous value in one organization taking on this multifaceted, network-building role.  
  • Educate Banks in How to Successfully Finance Child Care Businesses: Create a set of child care underwriting principles and offer trainings to banks on how to successfully lend in child care. Partner with financial institutions to create regular opportunities for banks to learn the “how’s” and “why’s” of financing child care, including building connections with gap financing partners and sharing models for Community Reinvestment Act (CRA) investments in child care.  
  • Shape the Banking Landscape with Grants, Guarantees, and Investments: By strategically deploying grants, philanthropic loan guarantees, or program-related investments, philanthropy can shape the capital market, incentivize engagement with the underwriting principles and navigators, and develop close partnerships with local and regional banks and nonprofit funders.  
  • Create a State Grant Application Toolkit: In addition to support from navigators, offer templates and examples for completing the state grant to minimize confusion and time spent on the application and increase use of this funding stream.  
  • Promote LB 840 Models that Benefit Child Care Centers and Homes: Track and distribute active models supporting child care and offer guidance to municipalities as they determine which models fit their community needs. Offer support to communities served primarily by unincorporated family child care providers where an LB 840 plan’s “eligible business” definition could create a barrier.  
  • Partner with Economic Development Agencies: Several of Nebraska’s economic development districts are mobilizing to support child care. Connect these agencies with child care capital navigators and underwriting best practices to increase their capacity to support and develop effective child care initiatives. Close partnerships with these agencies not only bring financing resources but also can ensure the needs of children, families, and child care business owners are considered early and often within broader conversations on community and economic development.  


The recommendations above would address key gaps in the access to capital landscape, build on the good work that is occurring across Nebraska, and leverage Nebraska Early Childhood Collaborative’s unique role as a systems-builder and direct child care business service provider. Implemented together, they could build a holistic, impactful continuum of supports that can fundamentally reshape access to capital for Nebraskan child care businesses. 

 Facilitating access to capital for child care entrepreneurs is a major step in building a child care system that meets the needs of Nebraska’s children and families. Lack of capital can prevent child care businesses from ever starting or from scaling up to meet community demand. 84% of Nebraska’s counties are child care deserts, and eleven counties lack a single licensed facility. First Five Nebraska estimates that these deficits in reliable, affordable, and quality care cost the state nearly $745 million annually in direct losses 

Nebraska Early Childhood Collaborative shared the report publicly with a large coalition of strategic leaders in the early care and education field in Nebraska, as well as foundations across the United States. The recommendations will be incorporated into the organization’s strategic planning and decision-making later this year. Ultimately, the Nebraska Early Childhood Collaborative will also encourage their partners to increase access to capital with strategies informed by the findings in the landscape analysis and FCF’s proposed recommendations.  

“This report shined a bright light on the need to inform the financial industry of the challenges providers face in accessing traditional capital to start their business. Children, families, and communities in Nebraska will benefit greatly when we’re able to expand the options available from traditional financial institutions and inform child care providers on how they can access those resources,” said Brandee Lengel, Vice President of Quality Child Care Partnerships.

The findings and recommendations can be found in detail in the final report. The FCF National Team is eager to work with other states, Native Nations, and stakeholders to determine the opportunities and barriers to access to capital for child care business. This understanding can result in more strategically directed funding and capacity-building efforts for child care businesses in a region.

How can we help with your system project? Learn more about how to partner with First Children’s Finance by contacting Molly Sullivan, Director of National Initiatives.

From Banks to Blocks: How Access to Capital Shapes the Child Care Sector in Nebraska