Buying a licensed daycare in Ontario: the licence, CWELCC and getting financed

Licensed child care is one of the most in-demand businesses in the GTA, but it is also one of the most regulated. The biggest mistake buyers make is assuming the licence comes with the building. It often doesn't.

1. The licence: asset purchase vs. share purchase

• Under Ontario's Child Care and Early Years Act, a child care licence is not transferable.
• Asset purchase (a new legal owner): you must apply as a new licensee through the Child Care Licensing System and pay the application fee. The seller must notify the Ministry of Education at least 30 days before the tentative closing date.
• Share purchase (same corporation, new shareholders): a new licence is not required, but the licensee still has to contact its program advisor about the change.

Build the licensing timeline into your offer conditions. Never close an asset deal before you know the licence will be issued.

2. CWELCC ($10/day child care)

Most licensed centres in Ontario take part in the Canada-Wide Early Learning and Child Care (CWELCC) system. Their revenue is shaped by government funding and fee rules, not just by what parents pay. Before you buy:

• Confirm the centre's CWELCC enrolment status and funding agreement with the local service system manager (the region or municipality).
• Ask how a change of ownership affects that funding, and get it in writing.
• Review 2–3 years of funding statements alongside the financial statements.

3. Due diligence specific to daycares

• Licensed capacity by age group, and the current waitlist
• Recent Ministry inspection reports and compliance history
• Staffing: RECE ratios, a qualified supervisor, staff turnover and wages
• The building: zoning, fire code, playground and washroom requirements
• The lease: child care is a specialized use, so make sure the term is long and the use clause protects you

4. Getting the loan approved

Lenders like daycares with stable enrolment and funding, but they will want:

• Down payment of roughly 20–30%. BDC uses this as its rule of thumb
• Proof of funding (CWELCC agreement) and enrolment numbers
• Your experience in early childhood education, or a qualified supervisor you will keep on
• A lease term that runs at least as long as the loan
• The usual documents: offer, 3 years of financials, Notices of Assessment, and a business plan

Options: CSBFP for equipment, leaseholds or the building; BDC for goodwill; and a vendor take-back to bridge the gap.

General information only. Confirm licensing with the Ministry of Education (childcare_ontario@ontario.ca) and funding with your local service system manager. Use a lawyer who has done child care transactions.

Speak with Inderpal Sidhu
Direct: (647) 338-6875
WhatsApp · Book a consult
HomeLife Silvercity Realty Inc., Brokerage. Independently owned and operated.