What is the appetite for lending like in the Childcare & Education sector?

Lending landscape

The UK childcare and education sector continues to attract robust interest from lenders. This momentum is driven by a combination of favourable economic conditions, stable interest rates, and supportive government policies. One of the most significant policy changes this September 2025 has been changes in the entitlement for children of eligible working families, enabling 30 hours of funded childcare per week in England, for children aged from nine months. This is expected to dramatically increase demand across the sector, and most day nursery operators have adapted their settings in line with the expected rise in occupancy numbers.

What are lenders looking for?

Lenders are particularly focused on financial performance and sustainability. Funding applications routinely require up-to-date management information and, in many cases, robust financial forecasts to support lending requests. This reflects broader shifts in the lending landscape, where there is an increased emphasis on business stability, cash flow management, and long-term planning, especially considering operational pressures and National Insurance costs.

There is also a growing interest in supporting businesses that positively contribute to society. The childcare sector, with clear community and social values, aligns well with the priorities of ethical investors and lenders who are actively seeking purpose-led businesses.

Our activity

Over the last 12 months, our client instructions have increased by 52%, with debt requirements rising by 67%. Our client base continues to be dominated by existing operators, accounting for 75% of activity, while 25% are first-time buyers.

We have secured interest rates as low as 1.2% above the Bank of England Base Rate, and the average margin across the sector is 2% above the Bank of England Base Rate.

We have also seen an increase in existing operators leveraging their current setting/s to acquire additional day nursery businesses. This strategy is possible due to the value added by operators to the businesses they acquire, such as increasing occupancy and reducing costs. The increased income facilitates a higher market value overall, thereby enabling the business to expand into additional settings. This method allows clients to utilise minimal or no cash to organically grow their business model.

A standout example of this was when an established childcare operator who, after acquiring their first freehold setting in 2024, successfully purchased a second site in less than 12 months. We arranged a £7.6 million facility at a 77% loan-to-value with a competitive interest rate of 1.66% over base. By leveraging the strength of their existing business, we enabled the client to expand with minimal personal capital, proving the scalability and efficiency of a well-performing model.

To speak about funding for your first childcare & education, get in touch with Alena Ray: alena.ray@christiefinance.com or +44 7590 486 356.