Nursery Mortgage & Finance Specialist Lending for Childcare and Day Nurseries

A nursery mortgage is a specialist commercial mortgage designed for purchasing, refinancing, or expanding childcare premises. With growing demand for childcare across the UK, day nurseries and day care settings are attractive propositions for lenders who understand the sector. Our broker team specialises in nursery finance and accesses the whole UK lender market to find competitive terms.

Whether you are an experienced operator looking to expand your portfolio, a first-time buyer acquiring your first nursery business, or looking to refinance an existing nursery mortgage, we provide expert guidance throughout the process. The childcare sector has unique lending requirements, including Ofsted ratings, staff-to-child ratios, and occupancy levels, that require a finance broker with specialist knowledge.

A market with government-backed income

The UK childcare market is worth approximately £7 billion annually, with demand consistently outstripping supply in many areas. Government-funded childcare hours (15 and 30 hours provisions) provide a baseline revenue stream that lenders view favourably, complemented by private fee income from additional hours and wraparound care. This combination of government-backed and private income makes nurseries one of the more stable childcare business models for lending purposes. Our broker team understands the income structure of nursery businesses and presents applications in a way that highlights the security and predictability of childcare revenue to lenders.

Acquisition finance for nurseries covers both the property and the business as a going concern. When purchasing an established nursery business, the lender values the property, goodwill, and trading performance separately. A strong business plan should demonstrate how you will maintain and grow occupancy, manage staff, and cater to local demand for childcare.

First-time nursery buyers need to show relevant experience, either in childcare management, education, or business operations. Experienced operators with proven track records in running a nursery will access better rates and higher LTVs. The type of finance available depends on your experience, the property condition, and the business's financial performance.

Working capital funding may also be needed alongside the main loan to cover staff costs, equipment, and initial operating expenses. Our broker team can arrange business finance packages that include both the acquisition loan and working capital facilities. Day nurseries and day care settings benefit from structured funding that matches the seasonal patterns of the childcare sector.

Staffing, TUPE and moving quickly on a deal

Staff costs represent the largest operating expense for nursery businesses, typically 55-70% of revenue, and lenders scrutinise staffing plans carefully. Demonstrating that you can maintain required staff-to-child ratios while remaining profitable is essential. The ongoing national shortage of qualified early years practitioners adds complexity to workforce planning, which lenders factor into their risk assessment. For operators purchasing an established nursery, TUPE transfer obligations for existing staff are an important consideration that affects both the acquisition cost and ongoing operating costs. Our team ensures that staffing plans and TUPE obligations are properly reflected in every nursery mortgage application.

The nursery acquisition market is active and competitive, with sellers often receiving multiple offers for well-performing settings. Having finance pre-agreed through a specialist broker gives you a significant advantage when making offers, as sellers and their agents prefer buyers who can demonstrate funding capability. We provide agreement-in-principle letters and fast-track application processing that enables our clients to move quickly when the right nursery opportunity arises. For nursery businesses valued above £500,000, we typically achieve completion within 8-12 weeks from offer acceptance, subject to standard legal and regulatory processes.

• Business plan: projected revenue, costs, and profitability, plus how you will maintain and grow occupancy.
• Ofsted rating: evidence of a Good or Outstanding grade, which most lenders prefer to see.
• Occupancy data: current and historic occupancy, with lenders typically looking for 70% or more sustained.
• Childcare experience: relevant qualifications or management experience, especially for first-time buyers.
• Deposit of 25% to 35%: the equity contribution expected, with first-time operators at the higher end.
• Staffing plan: staff-to-child ratios, qualified practitioner cover, and any TUPE obligations on acquisition.
• Trading accounts: financial statements demonstrating profitability and affordability of the loan.

The nursery sector is regulated and specialist, requiring a broker who understands Ofsted requirements, staffing regulations, and the unique cash flow patterns of childcare businesses. Not every lender has appetite for nursery lending, and those that do apply specific criteria around occupancy, staff qualifications, and operational standards.

At CMB, we bring decades of commercial finance expertise to nursery lending. Matt Lenzie's background in corporate banking at Lloyds Bank and Bank of Scotland means we understand business finance, affordability assessment, and what lenders look for in a nursery business application. We cater to operators of all sizes, from single-site day nurseries to multi-location nursery groups.

Every nursery mortgage application is unique. Our broker team provides a comprehensive type of finance assessment, comparing commercial mortgage products, business finance, and specialist nursery lending options to find the right solution for your needs. Get in touch for a free initial consultation.

Demographic tailwinds and ongoing support

The nursery sector benefits from strong demographic tailwinds and government policy support for expanded childcare provision. The extension of funded hours and the introduction of wrap-around childcare initiatives create additional demand that underpins business viability. Lenders who understand these sector dynamics are more willing to offer competitive terms. Our specialist knowledge of the nursery finance market, combined with Matt Lenzie corporate banking experience at Lloyds Bank and Bank of Scotland, ensures every application is positioned to take advantage of the positive lending environment for childcare businesses. We work with nursery operators from Cornwall to Scotland, accessing the best finance terms regardless of location.

Nursery finance is a relationship-driven sector where long-term broker support adds genuine value. We maintain ongoing relationships with our nursery clients, providing refinancing assessments as their businesses grow, expansion finance when new opportunities arise, and market intelligence on lending trends and product changes. This proactive approach ensures our nursery clients always have access to the most competitive finance terms available in the current market, supporting their growth ambitions at every stage.