Texas faces a significant childcare shortage. With growing demand for quality childcare across the state, government agencies at the federal, state, and local level have created programs to help daycare providers start, expand, and improve their operations. Daycare business owners in Texas may be eligible for grants, tax credits, and low-interest financing specifically designed for the childcare industry.
This guide covers the real programs available to Texas daycare and childcare businesses — from dedicated childcare grants to general small business programs that childcare providers frequently access.
Childcare-Specific Grant Programs
Texas Workforce Commission Childcare Programs
The Texas Workforce Commission (TWC) administers childcare subsidy programs that benefit both families and providers. Daycare businesses that accept subsidized children through TWC receive steady enrollment revenue and may access provider quality improvement funds. TWC also funds Texas Rising Star, a quality rating system that provides additional reimbursement to participating providers who meet higher quality standards.
Child Care and Development Fund (CCDF)
The federal CCDF is the largest source of childcare funding in the country. In Texas, CCDF dollars flow through TWC to support childcare subsidies, quality improvement initiatives, and provider development. Daycare businesses may be eligible for quality improvement grants, facility improvement funds, and professional development resources through CCDF-funded programs administered by local workforce boards.
Community Development Block Grant (CDBG) Childcare Projects
Cities and counties in Texas can use CDBG funds for childcare facility construction and renovation in low-to-moderate income areas. If your daycare serves or plans to serve a community that qualifies, you may be able to access facility improvement funding through your city or county's CDBG program.
Workforce Training Programs
Skills Development Fund
The TWC Skills Development Fund provides grants to community colleges that partner with employers for customized training. Daycare businesses can use this program to train staff on early childhood development, safety protocols, special needs care, and management skills. The training is delivered through a community college partnership at reduced or no cost to the employer.
Work Opportunity Tax Credit (WOTC)
The WOTC provides federal tax credits of $2,400 to $9,600 per qualifying new hire from target groups including SNAP recipients, veterans, and long-term unemployed individuals. Daycare businesses hiring from these groups can claim credits through the Texas Workforce Commission.
SBA Lending Programs
SBA 7(a) Loans
The SBA 7(a) program is widely used by daycare businesses for startup costs, facility renovation, equipment purchases, and working capital. SBA 7(a) loans offer lower interest rates and longer terms than conventional loans, with amounts up to $5 million.
SBA Microloans
For smaller daycare operations, SBA Microloans provide up to $50,000 through community-based nonprofit lenders. These are particularly useful for home-based daycares or small centers that need funding for playground equipment, safety upgrades, furniture, and initial operating costs.
SBA Community Advantage Loans
Community Advantage lenders specifically serve underserved markets and startup businesses. Daycare businesses in lower-income areas or operated by first-time business owners may find Community Advantage lenders more accessible than traditional SBA lenders.
Tax Credits for Daycare Businesses
Employer-Provided Childcare Credit (Section 45F)
While this credit is primarily for employers who provide childcare for their employees, daycare operators who contract with employers to provide on-site or near-site childcare can benefit from these arrangements. The credit provides up to 25% of qualified childcare facility expenses.
Energy Efficiency Tax Credits
Daycare facilities that make energy-efficient improvements — HVAC upgrades, insulation, lighting, or solar installations — may be eligible for federal energy tax credits. These credits can meaningfully reduce the cost of facility improvements.
Local and City-Level Programs
Several Texas cities have recognized childcare as an economic development priority and created local programs:
- City childcare desert initiatives: Some Texas cities offer incentives for daycare businesses opening in areas identified as childcare deserts — neighborhoods with few or no licensed providers.
- Facade and facility improvement grants: Cities with downtown revitalization programs may offer matching grants for exterior improvements to daycare facilities in designated areas.
- Property tax abatements: Some jurisdictions offer property tax abatements for childcare facilities making capital investments in targeted areas.
Certification and Contracting
Daycare owners who hold certain certifications can access additional opportunities:
- Texas Rising Star: Higher quality ratings lead to higher reimbursement rates for subsidized children.
- HUB Certification: Texas HUB certification may provide contracting preferences for childcare services provided to state agencies and institutions. Learn about HUB certification.
How Daycare Owners Should Approach Funding
- Start with TWC programs: Texas Rising Star and childcare subsidy participation provide steady revenue and quality improvement funding.
- Check local childcare initiatives: Contact your city's economic development office about childcare-specific programs.
- Explore SBA lending: SBA 7(a), Microloans, and Community Advantage loans offer favorable terms for daycare businesses.
- Use workforce training grants: Skills Development Fund can cover staff training costs through a community college partnership.
Find Programs That May Fit Your Daycare Business
Daycare businesses in Texas may be eligible for more programs than they realize — especially childcare quality improvement grants, workforce training funds, and SBA lending programs designed for small service businesses.
Not sure which programs may fit your business? Our free screening report checks your business against 150+ verified programs — grants, tax credits, loans, and incentives — and shows you which ones may match. Start your free screening →