Child Care, Essential to Economic Recovery, Received Just $2.3 Billion in PPP Funds ​During 2020

From our analysis, states receiving the most PPP funds for child care were, not surprisingly, California, Texas, and New York, where in each state, programs received amounts totaling more than $180 million. Similar trends are apparent in overall PPP loan data. In contrast, states receiving the least include Alaska, Montana, and Wyoming, where in each state, programs received loans totaling under $7 million.

Child care providers accessing the PPP were almost entirely for-profit businesses, and were more likely to be for-profit than the overall industry. Just 10% of recipients reported non-profit status, lower than the overall industry makeup in which about 23% are non-profit businesses.

Overall, the child care child care industry received similar total funding as sectors such as public administration, management, and utilities companies, but received more total loans than these industries, indicating recipients applied for smaller amounts on average. At the same time, the size of the child care industry is disproportionately large when compared to these sectors, suggesting inequitable access to PPP funds for child care programs. This data also supports our previous concerns about the program, and responses from previous surveys of providers documenting challenges in accessing and benefiting from the PPP.

As of August 8, the PPP closed to new loan applications with almost $134 billion in available funding, but the Coronavirus Response and Relief Supplemental Appropriations Act, passed in December 2020, reopened the PPP through March 31, 2021. The law also increased the program’s total authorization from $659 billion to $806.45 billion, and included reforms such as allowing businesses who have already received a loan to receive a “second-draw” of up to $2 million. On February 22, in an attempt to support our nation’s smallest companies, and ensure that lenders could appropriately work with such businesses, the Biden Administration announced a 14-day period in which only those companies with fewer than 20 employees could apply for the PPP. As of February 21, the SBA had approved over $140 billion during 2021 under these new authorities, or about a quarter of the amount provided during 2020.

In 2019, the Committee on Economic Development reported child care to be a $47.2 billion per year market, employing 1.5 million workers. The $2.3 billion that was loaned to providers during 2020 was a critical lifeline for retaining staff, in addition to the $3.5 billion in child care funds provided in the CARES Act. However, the reality that less than 1% of the total $525 billion in lending was given to child care during 2020 indicates the challenges of reaching the most critical and important small businesses around our country – the child care industry.

The Bipartisan Policy Center analyzed publicly available data on recipients of the Paycheck Protection Program released by the Small Business Administration on August 8, 2020. Recipients identified under the NAICS code 624410, “Child Day Care Services” were included in our analysis. The “Child Day Care Services” industry includes establishments primarily engaged in providing day care of infants or children, including for older children when they are not in school and may also offer pre-kindergarten and/or kindergarten educational programs. Illustrative examples include child day care services, nursery schools, child or infant day care centers, and preschool centers.