Quality child care is vitally important to everyone living in the northwest region: parents and caregivers who work or attend school, the child care sector itself, employers and of course, the children.  The child care finance program was created to recognize and support the child care providers in northwest Minnesota.



  1. Increase child care slots in the region.
  2. Increase the number of Parent Aware rated child care providers and/or those providers who are already rated and are moving up the rating scale.
  3. Retain existing child care slots.


Eligible borrowers: Child care providers located in the following Minnesota counties:  Beltrami, Clearwater, Hubbard, Kittson, Lake of the Woods, Mahnomen, Marshall, Norman, Pennington, Polk, Red Lake and Roseau.


Eligible Uses:  costs incurred to obtain a child care license, costs to obtain a Parent Aware rating or increase your rating, costs for safety improvements as required by county licensing authority. Other costs that could be considered:  toys, furniture, equipment, or other costs that directly benefit the child care business.  Debt refinancing not allowed UNLESS the original debt was taken to satisfy licensing requirements or safety issues.  Proof of satisfying licensing requirements or safety issues is required.

Loan Terms (For existing providers keeping same license capacity)

Loan Amount: up to $ 5,000                         Interest Rate: 1.5%

Term: up to 5 years


Note: The interest rate can be reduced to 0.5% during the loan term, for the following factors: the child care business becomes Parent Aware rated or increases the Parent Aware rating.  Documentation is required.


Loan Collateral:  a lien will be taken on child care business assets.  The lien filing fee ($ 20.00) is collected at loan closing.


Credit Report and Loan Workup Costs: $ 25.00 (Waived)

Additional Resources: monthly e-newsletter, also eligible for small grants to be used for training fees, consultant fees, legal or accounting fees, or other “brain power” activities that benefit the child care owner and business. Funds can’t be used to purchase physical assets. ++ 

Monthly loan payments done electronically though a bank account.  Verification of active license and number of slots to be reviewed quarterly with borrower and also verified with the Department of Human Services.

Loan Terms (For new providers or existing providers changing license to increase capacity)

Apply now! Funding is available July 1, 2019.

Loan Amount: up to $ 5,000                         Interest Rate: 0.0%

Term: up to 5 years

Repayment Schedule:  no payments; a portion of the loan principal will be written off each year to term end; loan is contingent on an active child care business and maintaining slots;  verification of active license and number of slots reviewed quarterly with borrower and with the Department of Human Services.  An IRS form 1099-C (Cancellation of Debt) is issued each year for the principal portion written off.  If the child care business closes, notice will be given that the remaining loan balance is due and payable.  However, there will be no collection activity or other costs. Borrowers are eligible for these terms ONCE. 

Loan Fees:  NONE

Electronic Loan application process:  one page loan application*; please allow 10 business days for loan processing; Loan closing at your location and your convenience. Note: NMF accounting department can issue loan checks usually within five business days of loan approval.

*To obtain a loan application form, fill out the contact form at the bottom of this page

Electronic Loan application process:  one page loan application; Please allow 10 business days for loan processing.  Loan closing at your location and at your convenience. Note: NMF accounting department can issue loan checks about five business days from loan approval.


++ – contingent on federal funding source

Frequently Asked Questions

Any new or existing child care that is licensed in the following counties:  Beltrami, Clearwater, Hubbard, Kittson, Lake of the Woods, Mahnomen, Marshall, Norman, Pennington, Polk, Red Lake or Roseau is eligible to apply.  A Rule 2 non-profit would also be eligible, as are for-profit child care centers.

Most likely.  To qualify, you need to be in the process of getting licensed through your respective county licensor.  If you are in the process and have passed either the licencor inspection or the fire marshal inspection, you can apply for a loan.

Yes, while the funds cannot be used to purchase a residential property, you are eligible to apply for funds for needs within the child care space.

The program uses two types of financing:  a forgivable loan to child care providers who are creating new slots, or increasing their slots;  a low interest loan for those child care providers who may need equipment, supplies, or other soft costs, but do not plan on adding more slots.  Note: the low interest loan cannot fund real estate improvements.

Both types of financing are considered loans, but the forgivable loan is not paid back.  Each year of the loan, a portion is forgiven so that by the end of the loan term, the loan balance is zero.  Each year an IRS form 1099-C (cancellation of debt) will be prepared and submitted to you and the IRS for that year’s amount that has been forgiven. This amount is considered Income to you, so you should discuss it with your tax preparer.

The low interest loan will have regular monthly payments at 1.5% with a term as high as five years.  The approximate monthly payment for a $ 5,000 loan at 1.5% for 60 months is $ 86.55.

The maximum amount that can be borrowed is $5,000. Forgivable loans have an interest rate of 0% with a maximum five year term.  As long as you provide licensed child care during the course of those 5  years, a portion of the principal balance is forgiven each month.

The low interest loans start at 1.5% with a maximum five year term.  If you have a ParentAware rating at the time of application, the interest rate is reduced to 0.5%.  Further, if you become ParentAware rated during the loan term, the interest rate will be reduced to 0.5% for the remainder of the term.

Of course !  Borrow to your needs for the child care business.  See the chart below:

My loan request                Child Care Business

$ 1,500                                      at least 12 months providing child care

$1,501 – $ 2,500                      at least 24 months providing child care

$ 2,501 – $ 3,500                     at least 36 months providing child care

$ 3,501 – $5,000                      at least 48 months providing child care

The remaining principal amount of the loan at the time of closure, will need to be paid, according to the payment schedule shown on the Note.

If you find that you need to temporarily close your child care business, please contact Diane or Sean promptly.  If you have a low interest loan vs a forgivable loan, we will work with you to determine if the automatic payments need to be halted for a time.  Depending on the amount of time you are temporarily closed, the loan may also be extended.  Each case is different, so please contact Diane or Sean.

The forgivable loan has the broadest utility.  It can be used to meet safety, fire marshal or licensing requirements, such as: installation of handrails, egress windows, fences, smoke and carbon monoxide detectors, fire door, and other safety improvements.  It can also be used to purchase toys, books, equipment, supplies and other soft costs in your pursuit to provide quality care.  The low interest loan can be used for many things, excluding real estate improvements: purchase toys, books, equipment, and supplies used to provide quality care, and other soft costs.  Costs to attend training to maintain your license is also an eligible use of funds. Northwest Minnesota Foundation lending staff reserves sole discretion to determine if the use of the requested funds is eligible.  (Note: toys and supplies should be new and meet consumer product safety commission standards.)

If there is any question about what is eligible, please do not hesitate to ask.  This is not a comprehensive list, and there are a lot of other eligible uses.

The forgivable loan can be used to offset the costs to finish the space.  The low interest loan, due to federal rules, has some restrictions.  It’s best to contact Diane or Sean to discuss the needed building improvements.

In short, no; this program is not intended for home maintenance projects.  While we recognize that the day-to-day use of the home for child care has impacts on the home, projects that have too much of a connection to normal home maintenance and improvements don’t qualify for the program.  This includes room remodels, siding and roofing, driveway paving, decks, HVAC, water heaters, kitchen appliances (in the home’s primary kitchen).  Exceptions can be made if the project is being required by the licensor as a safety matter.  Northwest Minnesota Foundation lending staff reserves sole discretion to determine if the use of the requested funds is eligible.

If you incurred those costs within the last 12 months from the date of applying and your request is approved, you are permitted to direct the money to pay off or pay down a loan (as long as the loan was specifically related to establishing your child care) or reimburse yourself.  You should include receipts or other proof of those costs with your application.  Be sure to discuss this strategy with your accountant/tax preparer to be aware of tax implications.

Contact Diane or Sean by phone or email to obtain a one page application form. Complete, sign, date and email back to Diane or Sean. Note the attachments needed!

While we will review your credit as part of the application review process, a credit score is not the sole determining factor for a decision to approve or deny your request.   If your credit score is determined to be “low” (under 600), we will most likely have additional questions and will contact you.

The forgivable loan does not require collateral.  The low interest loan is a conventional business loan and does require collateral.  Collateral will be restricted to your child care business equipment, supplies, toys, etc.

Email submission is encouraged to speed up the process.  From the time of receipt, please allow five business days for a loan review and decision. Although we make every effort to review and make a decision quickly, sometimes special situations arise, which may require additional time.  Once approved, a closing date can be scheduled as soon as 5 business days after approval.

Absolutely not (unless you want to come to Bemidji for other reasons).  We bring the closing to you at a time and location that’s convenient for you.  Closings are pretty straight forward and only take about a half hour, depending on any questions you might have.

The forgivable loan has no out of pocket fees or closing costs.  The low interest loan typically only has one closing cost for the UCC-1 filing fee, which is currently $ 20.00.  Of course, there are exceptions that arise from time to time which will be addressed on a case by case basis.

July 1, 2018 starts this new loan program.   The forgivable loan program has $ 50,000 available to be used anywhere in the twelve county area.  An additional $ 39,000 is targeted to specific communities as mandated by the funding source.   We anticipate that the funds will go quickly, so the search has begun for new loan capital sources.

The low interest loan is a special part of our regular microloan program, so applications will be accepted on an ongoing basis.

The program is on a first-come, first served basis.  Complete applications are processed first. If your application is deemed incomplete, you will be contacted promptly for any missing information.  Please note that submitting an application does not imply automatic approval.  If you have questions, don’t hesitate to contact Diane or Sean prior to submitting.

The only time we will request receipts is if you have already incurred costs to meet licensing or safety requirements, which then need to be included as part of the application.  When you sign the Promissory Note, you are agreeing to use the funding specifically for child care.

Nothing monthly.  Once every three months, we will contact you (by phone or email) to ask about your current operation and confirm your license status.   Once a year, we will send you a survey so you can update us on any jobs and child care slots that you have created.


Still have questions? Feel free to send us a message and we will get in touch with you soon!