Childcare sector set to boom as perfect storm of population growth, subsidies and funding availability hits

Childcare centres and services are beginning to see the light after a challenging couple of years as the industry bore the brunt of the COVID-19 pandemic. 

Lockdowns, family health concerns, ensuing financial pressures and staff shortages saw falling occupancy rates and temporary centre closures resulting in a significant, although short-term, reduction of yields.

The post-pandemic environment is looking very different with business viability currently underpinned by several favourable market conditions and predictions, including:

ONE: Social and Demographic Changes

The demand for childcare is on the up thanks to both population growth and the increase in the number of double-income or two-working-carer households.
According to the Australian Bureau of Statistics (ABS) in the 10 years from March 2011 to March 2021 there’s been a 7.7% increase in the number of children aged five or under attending childcare with 46.7 per cent of children aged 0-5 years in approved childcare.

Overlay this upward trend with a 9.9% increase in the number of children aged under 3 by 2024, and a key target market is the fastest-growing proportion of the population.
Additionally, as more women than ever before return to the workforce, enrolments in early childcare and outside school hours care are set to further increase.

TWO: Massive Government Subsidies

The post-pandemic environment is calling for adaptation all round. While many parents and carers are revising the balance of in-office and work from home (WFH) arrangements, resulting in a demand for more flexible childcare options, others are re-evaluating the value of formal childcare in line with the Federal Government’s $5.4 billion proposal for universal childcare. This proposal aims to increase family subsidies to the tune of 90% (for the first child) for all families (with no income cap) and is projected to facilitate easier access to childcare for even more families as of July 2023.
In addition to the Federal Government’s proposal, individual State Governments are touting the earlier roll out of further focussed economic reforms to boost childcare places and accessibility through reduced costs aimed at increasing female workplace participation in the workplace, ultimately reducing critical labour shortages.

THREE: Banks are chasing Childcare Business

Favourable market conditions, including proposed healthy government investment, are influencing appetites for childcare centre lending and we are starting to see some lenders introduce incentives and more flexible lending criteria, such as reduced establishment fees, specifically for childcare centre operators.  An experienced commercial finance broker with a proven track record in childcare centre finance will know exactly what each lender has on offer. 

How to secure a better finance deal for your childcare centre

How the bank or lender calculates the interest rate and fees you will pay is assessed based on perceived risk, sometimes referred to as a Risk Grade. Your business loan application will be graded based on several risk factors, including (but not limited to):

Additional factors for consideration will include:

The higher the bank’s perceived risk of your business, the higher the all-up rate or cost of your funding. 

It’s important to note that every lender will weigh risk factors differently and can change their policy regularly.

You will be more likely to save money on your business finance if your finance broker has a proven track record in childcare centre funding and a thorough understanding of current business lending policies from a range of banks and lenders. 

Of course, for more specific information on competitive refinancing for your existing childcare business or funding options for a new opportunity, please get in touch.


Recommended Childcare Industry Professionals

If you are looking to purchase a childcare centre, getting experienced professionals on your side is the first step to business success – business brokers, solicitors, accountants, financial planners, tax advisors and more. I work with proven specialists in the childcare field daily and am happy to point you in the right direction.

If you are looking at your buying or even selling options, check out:



THE FINEPRINT: The information provided on this site is on the understanding that it is for illustrative and discussion purposes only. While all care and attention are taken in its preparation any party seeking to rely on its content or otherwise should make their own enquiries and research to ensure its relevance to your specific personal and business requirements and circumstances.

Green Finance Group Pty Ltd ACN 145 035 221 is authorised under LMG Broker Services Pty Ltd ACN 632 405 504 Australian Credit Licence 517192.

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Meet the Author

"While my extensive industry experience covers all areas of banking, loans and leasing – commercial, equipment and residential – my business finance specialties are the broader hospitality, accommodation and childcare industries."

Daniel Green

  • Commercial Finance, Equipment Finance, Home Finance

Fortitude Valley, Brisbane

Australia's leading hospitality, accommodation and childcare finance specialist and winner of Australian Broker of the Year 2022.

Prior to establishing GFG in 2010, I occupied senior management roles in some of Australia's leading financial institutions including Commonwealth Bank of Australia, Suncorp, Bankwest and Westpac.