Business plan
Harborlight Early Years
Childcare and daycare
Prepared for a bank or SBA lender
Prepared 2026-09-20 · 5-year model
Every figure in this document was computed by a deterministic model from the assumptions listed within it. The workbook exported alongside contains the same model as live formulas.
Key figures
| Year 1 revenue | $480,059 |
|---|---|
| Year 3 revenue | $1,242,350 |
| Operating profit from | Month 8 |
| Lowest cash balance | $30,818 · Month 12 |
| Minimum debt service coverage | -2.37× |
01 Executive summary
Harborlight Early Years is a childcare and daycare business. A licensed childcare centre opening with two rooms and adding a third in year two, in a converted single-storey building with an enclosed outdoor space. Tuition is billed monthly in advance. Staffing is set by state child-to-staff ratios rather than by choice, which is the defining constraint on the model and the reason the margin is what it is.
The model projects revenue of $480,059 in the first year, reaching $1,242,350 by year three and $1,211,517 by year five. Gross margin runs at 46.6%, against an industry band of 45.0% to 70.0%.
The business turns an operating profit in month 8. The lowest cash balance across the plan is $30,818, in month 12.
Funding comprises $150,000 of equity and owner contribution and $260,000 of debt. Debt service coverage does not fall below -2.37× in any year of the plan.
— This section was composed directly from the financial model because no language model is configured. Set ANTHROPIC_API_KEY to generate it with Claude. Every figure above is the same computed figure either way.
02 Company description
Harborlight Early Years operates in childcare and daycare. A licensed childcare centre opening with two rooms and adding a third in year two, in a converted single-storey building with an enclosed outdoor space. Tuition is billed monthly in advance. Staffing is set by state child-to-staff ratios rather than by choice, which is the defining constraint on the model and the reason the margin is what it is.
The plan begins in 2026-01 and runs for 5 years. Trading begins in month 3, with the preceding months given over to preparation.
The owner draws $74,000 a year. That figure is stated explicitly because a plan showing no owner compensation invites a lender to substitute a market salary and recompute the coverage ratios themselves.
— This section was composed directly from the financial model because no language model is configured. Set ANTHROPIC_API_KEY to generate it with Claude. Every figure above is the same computed figure either way.
03 Products and services
Harborlight Early Years earns from enrolment, modelled as customers multiplied by a monthly price, net of churn.
The model assumes 5 new customers in the first month at $1,350 a month, with 3.0% of the base leaving each month.
Direct costs run at 53.4% of revenue, leaving a gross margin of 46.6%. The industry median is 56.0%.
— This section was composed directly from the financial model because no language model is configured. Set ANTHROPIC_API_KEY to generate it with Claude. Every figure above is the same computed figure either way.
04 Market analysis
The market section is built from the drivers in the financial model rather than from a published market-size figure. That is deliberate: a share-of-a-large-market claim is the most common reason a market section is dismissed.
The build starts from 3,900 children under five within the catchment, of whom 44.0% are plausible buyers spending $14,400 a year. That gives a total addressable market of $24,710,400, of which $3,953,664 is serviceable and $1,245,404 is realistically obtainable inside the plan horizon.
The model assumes 5 new customers in the first month at $1,350 a month, with 3.0% of the base leaving each month.
At the modelled volumes, the business needs $71,981 of revenue a month to cover its fixed costs. Whether that level of demand exists in the catchment is the question this section has to answer, and it is the assumption most worth testing before committing capital.
— This section was composed directly from the financial model because no language model is configured. Set ANTHROPIC_API_KEY to generate it with Claude. Every figure above is the same computed figure either way.
05 Competitive landscape
A competitive analysis is only persuasive when it names real competitors with observed prices and dates. Those have not yet been gathered for this plan, and this section should not pretend otherwise.
What the model does establish is the price point the business has to defend: $1,350. Any competitor operating below that price, or offering materially more at the same price, is a direct threat to the volumes assumed here.
— This section was composed directly from the financial model because no language model is configured. Set ANTHROPIC_API_KEY to generate it with Claude. Every figure above is the same computed figure either way.
06 Marketing and sales
Marketing runs at 2.0% of revenue in the model. No per-customer acquisition cost has been established yet, which makes the marketing line the least tested assumption in the plan.
— This section was composed directly from the financial model because no language model is configured. Set ANTHROPIC_API_KEY to generate it with Claude. Every figure above is the same computed figure either way.
07 Operations
Operations are modelled through the cost base rather than described separately. Operating expenses total $329,612 in year one, rising to $418,319 by year three.
Working capital assumes customers pay after 4 days and suppliers are paid after 21 days.
— This section was composed directly from the financial model because no language model is configured. Set ANTHROPIC_API_KEY to generate it with Claude. Every figure above is the same computed figure either way.
08 Team and management
The business is led by its owner, who takes $74,000 a year from month 1.
Alongside the owner, the plan carries 4 teachers at $38,000 each, 4 teachers, second room at $38,000 each, 5 teachers, third room at $38,000 each, 1 administrator at $42,000 each. Payroll is loaded at 19.7% above gross wages to cover employer taxes and benefits.
— This section was composed directly from the financial model because no language model is configured. Set ANTHROPIC_API_KEY to generate it with Claude. Every figure above is the same computed figure either way.
09 Applicable regulations
Regulatory obligations for childcare and daycare vary by jurisdiction, and this section should be completed against the requirements of the specific city and state in which the business will operate.
Licences, inspections and insurance requirements should be confirmed with the relevant authority before the plan is submitted. A plan that asserts a specific requirement incorrectly is worse than one that states the obligation will be confirmed.
— This section was composed directly from the financial model because no language model is configured. Set ANTHROPIC_API_KEY to generate it with Claude. Every figure above is the same computed figure either way.
10 Risks and mitigations
The plan reaches operating profit in month 8, and the cash trough of $30,818 in month 12 is the point of greatest exposure.
The assumption most worth challenging is the churn rate. A shortfall there moves the revenue line directly, and the cost base is largely fixed in the first year, so the effect falls straight to cash.
Debt service coverage bottoms out at -2.37×, which leaves little room between the plan and its obligations.
— This section was composed directly from the financial model because no language model is configured. Set ANTHROPIC_API_KEY to generate it with Claude. Every figure above is the same computed figure either way.
11 AI disruption resilience
Lenders began asking small-business borrowers in 2026 how artificial intelligence might reshape their industry over the life of a long loan, and have declined applications where the business looked straightforwardly automatable. This section exists to answer that question rather than avoid it.
Assessed task by task and weighted by what each part costs to run, exposure stands at 21.6% across 76.0% of the cost base — low exposure. The weighting matters: a handful of automatable tasks that cost almost nothing is a different business from one automatable task carrying most of the overhead.
The parts most open to it are enrolment, billing and compliance record-keeping; curriculum planning and parent reporting. Routine and already served by sector software. Automation reduces administrative load without touching the service.
What is genuinely hard to automate here: Licensed childcare is a regulated, physically present service with a mandated staffing floor. That floor caps the margin and it also means the core of this business cannot be automated away over the life of the loan.
The response is planned rather than hoped for: enrolment, billing and compliance records on sector software from opening., to keeps administrative cost from rising with enrolment through the second room..
— This section was composed directly from the financial model because no language model is configured. Set ANTHROPIC_API_KEY to generate it with Claude. Every figure above is the same computed figure either way.
12 Financial plan
Revenue is built from drivers rather than from a growth rate. The model assumes 5 new customers in the first month at $1,350 a month, with 3.0% of the base leaving each month.
The result is $480,059 in year one and $1,211,517 by year five, with EBITDA moving from -$95,337 to $111,577 over the same period.
The balance sheet ties in all 60 periods of the model. Cash reaches its low point of $30,818 in month 12, and does not go negative at any point.
Debt service coverage is -2.37× in year 1, 2.40× in year 2, 3.32× in year 3, 3.35× in year 4, 2.24× in year 5.
— This section was composed directly from the financial model because no language model is configured. Set ANTHROPIC_API_KEY to generate it with Claude. Every figure above is the same computed figure either way.
13 Suggested next steps
Three things determine whether this plan survives contact with a reader. First, the market section needs real evidence: named competitors, observed prices, and a bottom-up demand estimate for the specific catchment.
Second, the assumptions currently carried as industry defaults should be replaced with measured figures wherever that is possible. The plan records which is which, and a reader will notice.
Third, the cash trough of $30,818 in month 12 should be stress-tested against a slower start than the one modelled.
— This section was composed directly from the financial model because no language model is configured. Set ANTHROPIC_API_KEY to generate it with Claude. Every figure above is the same computed figure either way.
Market size, built from the ground up
Each line is derived from the one above it, so a reader can disagree with one number rather than with the conclusion.
| children under five within the catchment | 3,900 |
|---|---|
| Of whom are plausible buyers 44% of 3,900 | 1,716 |
| Spend each per year | $14,400 |
| Total addressable market 1,716 × spend | $24,710,400 |
| Serviceable, given where and how we sell 16% of the total | $3,953,664 |
| Obtainable inside the plan horizon 31.5% of serviceable | $1,245,404 |
Financial statements
5 years, computed from the drivers listed in the plan. The balance sheet carries its own tie row.
Profit and loss
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Enrolment | $480,059 | $1,028,542 | $1,242,350 | $1,276,877 | $1,211,517 |
| Revenue | $480,059 | $1,028,542 | $1,242,350 | $1,276,877 | $1,211,517 |
| Cost of sales | ($245,783) | ($530,457) | ($678,035) | ($680,452) | ($675,877) |
| Gross profit | $234,275 | $498,085 | $564,314 | $596,425 | $535,640 |
| Salaries | ($134,606) | ($138,794) | ($138,794) | ($138,794) | ($138,794) |
| Rent | ($110,400) | ($113,712) | ($117,123) | ($120,637) | ($124,256) |
| Utilities | ($19,200) | ($19,968) | ($20,767) | ($21,597) | ($22,461) |
| Insurance | ($17,400) | ($17,400) | ($17,400) | ($17,400) | ($17,400) |
| Marketing | ($9,601) | ($20,571) | ($24,847) | ($25,538) | ($24,230) |
| Other | ($38,405) | ($82,283) | ($99,388) | ($102,150) | ($96,921) |
| Operating expenses | ($329,612) | ($392,728) | ($418,319) | ($426,116) | ($424,063) |
| of which owner compensation Shown separately because a lender recomputes coverage without it. | $88,541 | $88,541 | $88,541 | $88,541 | $88,541 |
| EBITDA | ($95,337) | $105,357 | $145,995 | $170,309 | $111,577 |
| Depreciation | ($28,000) | ($28,000) | ($28,000) | ($28,000) | ($28,000) |
| Operating profit | ($123,337) | $77,357 | $117,995 | $142,309 | $83,577 |
| Interest | ($28,696) | ($26,975) | ($24,974) | ($22,738) | ($20,237) |
| Profit before tax | ($152,033) | $50,382 | $93,021 | $119,571 | $63,339 |
| Tax | $0 | $0 | $0 | ($23,298) | ($13,301) |
| Net income | ($152,033) | $50,382 | $93,021 | $96,273 | $50,038 |
Cash flow
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Net income | ($152,033) | $50,382 | $93,021 | $96,273 | $50,038 |
| Depreciation added back | $28,000 | $28,000 | $28,000 | $28,000 | $28,000 |
| Change in receivables | ($8,897) | ($3,863) | ($1,262) | $237 | $1,038 |
| Change in inventory | $0 | $0 | $0 | $0 | $0 |
| Change in payables | $45,285 | $16,753 | $1,368 | $38 | ($668) |
| Change in deferred revenue | $0 | $0 | $0 | $0 | $0 |
| Operating cash flow | ($87,645) | $91,272 | $121,127 | $124,549 | $78,407 |
| Capital expenditure | ($280,000) | $0 | $0 | $0 | $0 |
| Investing cash flow | ($280,000) | $0 | $0 | $0 | $0 |
| Equity raised | $150,000 | $0 | $0 | $0 | $0 |
| Grants received | $0 | $0 | $0 | $0 | $0 |
| Debt drawn | $260,000 | $0 | $0 | $0 | $0 |
| Debt repaid | ($11,538) | ($16,964) | ($18,964) | ($21,201) | ($23,701) |
| Financing cash flow | $398,462 | ($16,964) | ($18,964) | ($21,201) | ($23,701) |
| Net change in cash | $30,818 | $74,309 | $102,163 | $103,348 | $54,707 |
| Closing cash | $30,818 | $105,127 | $207,290 | $310,638 | $365,345 |
Balance sheet
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash | $30,818 | $105,127 | $207,290 | $310,638 | $365,345 |
| Accounts receivable | $8,897 | $12,760 | $14,022 | $13,785 | $12,747 |
| Inventory | $0 | $0 | $0 | $0 | $0 |
| Property and equipment, net | $252,000 | $224,000 | $196,000 | $168,000 | $140,000 |
| Total assets | $291,715 | $341,886 | $417,312 | $492,423 | $518,092 |
| Accounts payable | $45,285 | $62,038 | $63,406 | $63,445 | $62,776 |
| Deferred revenue | $0 | $0 | $0 | $0 | $0 |
| Debt | $248,462 | $231,499 | $212,535 | $191,334 | $167,634 |
| Total liabilities | $293,748 | $293,537 | $275,941 | $254,779 | $230,410 |
| Paid-in capital | $150,000 | $150,000 | $150,000 | $150,000 | $150,000 |
| Retained earnings | ($152,033) | ($101,651) | ($8,629) | $87,644 | $137,682 |
| Total equity | ($2,033) | $48,349 | $141,371 | $237,644 | $287,682 |
| Assets less liabilities and equity Zero in every period, or the model is wrong. | 0 | 0 | 0 | 0 | 0 |
Underwriter view
Debt service coverage
Cash available is EBITDA less cash taxes. The threshold is 1.10× for SBA 7(a) Small Loan, per SBA Notice 5000-875701, in force from 2026-03-01.
| Year | Cash available | Debt service | Coverage |
|---|---|---|---|
| Year 1 | -$95,337 | $40,234 | -2.37× ▼ short |
| Year 2 | $105,357 | $43,938 | 2.40× |
| Year 3 | $145,995 | $43,938 | 3.32× |
| Year 4 | $147,011 | $43,938 | 3.35× |
| Year 5 | $98,275 | $43,938 | 2.24× |
SBA 7(a)
$260,000 at 11.20% over 120 months, 3 interest-only
| Year | Opening | Interest | Principal | Closing |
|---|---|---|---|---|
| Year 1 | $260,000 | $28,696 | $11,538 | $248,462 |
| Year 2 | $248,462 | $26,975 | $16,964 | $231,499 |
| Year 3 | $231,499 | $24,974 | $18,964 | $212,535 |
| Year 4 | $212,535 | $22,738 | $21,201 | $191,334 |
| Year 5 | $191,334 | $20,237 | $23,701 | $167,634 |
| Year 6 | $167,634 | $17,442 | $26,496 | $141,138 |
| Year 7 | $141,138 | $14,318 | $29,621 | $111,517 |
| Year 8 | $111,517 | $10,824 | $33,114 | $78,404 |
| Year 9 | $78,404 | $6,919 | $37,019 | $41,385 |
| Year 10 | $41,385 | $2,553 | $41,385 | $0 |
Sources and uses
| Owner injection | $150,000 |
|---|---|
| SBA 7(a) | $260,000 |
| Total sources | $410,000 |
| Fit-out, playground and equipment | $280,000 |
| Working capital and operating runway | $130,000 |
Equity injection 36.6% of total capital, against a 10.0% minimum (SBA SOP 50 10 8).
Owner compensation
Shown separately because a lender recomputes coverage without it, and because the E-2 marginality test is assessed on it.
| Year 1 | $88,541 |
|---|---|
| Year 2 | $88,541 |
| Year 3 | $88,541 |
| Year 4 | $88,541 |
| Year 5 | $88,541 |
AI disruption resilience
Assessed task by task and weighted by what each part costs to run, exposure stands at 21.6% across 76.0% of the cost base — low exposure.
What is genuinely hard to automate here: Licensed childcare is a regulated, physically present service with a mandated staffing floor. That floor caps the margin and it also means the core of this business cannot be automated away over the life of the loan.
| Task | Share of cost | Exposure |
|---|---|---|
| Enrolment, billing and compliance record-keeping Routine and already served by sector software. Automation reduces administrative load without touching the service. | 8.0% | high |
| Supervision and care of children Ratio-mandated, physically present, and licensed. There is no version of this task that a machine performs. | 62.0% | low |
| Curriculum planning and parent reporting Preparation and reporting automate; the observation the reporting is based on does not. | 6.0% | moderate |
Sources
No outside sources were relied on in this plan.
Methodology
Every figure in the statements was computed by a deterministic model from the assumptions in this document. No figure was written by a language model; the narrative describes arithmetic it did not perform. The narrative in this document was composed directly from the model.
Industry context is drawn from Early education operating data, 2026 for Childcare and daycare. Benchmarks are shown for comparison and never substituted for the figures in this plan.
Regulatory values used
| Value | Used | Source | In force from | Confidence |
|---|---|---|---|---|
| Debt service coverage threshold (SBA 7(a) Small Loan) | 1.10× | SBA Notice 5000-875701 | 2026-03-01 | secondary |
| 7(a) Small Loan ceiling | $500,000 | SBA SOP 50 10 8 | 2025-06-01 | unverified |
| Minimum equity injection | 10.0% | SBA SOP 50 10 8 | 2025-06-01 | secondary |
Configuration last reviewed 2026-09-19.
Still to be confirmed against a primary source
Listed rather than omitted. A plan that marks its own unverified inputs is worth more than one that presents everything with equal confidence.
- SBA SOP DSCR thresholds and the 2026-10-01 SOP 50 10 8.1 change
- SBA guaranty fee schedule (fiscal-year dependent)
- 7(a) Small Loan ceiling, which selects the DSCR threshold
- Section 179 limit and bonus depreciation percentage for 2026
- FICA wage base for 2026
- EB-5 thresholds and the 2027-01-01 inflation adjustment
- Matter of Ho element list, against the original decision
- 9 FAM 402.9 subsection lettering (sources conflict; no pin cites until resolved)