Staff are paid monthly. Funding arrives termly.

Nursery money runs on a timing mismatch. Your biggest cost by far is staff, often 70 to 75 percent of turnover, and you pay those wages every week or month while a large slice of your income arrives late. Government funded hours for two, three and four-year-olds are paid by the local authority termly and usually in arrears, frequently on an estimate at the start of term that is reconciled later, so the cash can lag the care you have already delivered by weeks. Parent-paid fees help, but they sit alongside funded places rather than replacing them, and the published funding rate per hour often falls below what a place actually costs to staff and run.

That gap between paying out and being paid is normal for the sector, and it is exactly what external funding is built to smooth. Capvant is a marketplace, not a lender. We match nursery and childcare owners with a network of vetted funding partners who compete for your business, so you see options side by side rather than chasing one bank. We do not lend, set the rates or make the credit decision. Comparing options is a soft search with no impact on your credit score, and a hard check only happens if you choose to accept an offer.

Childcare demand is not flat across the year. Every September a cohort of your oldest children leaves for reception, and the new intake often builds gradually as families settle little ones in over the autumn term. That can leave a soft patch across late summer, with August frequently the lowest-occupancy month while fee income drops but your rent, business rates and core staff costs carry on regardless. Settings with wraparound or holiday clubs smooth some of this, but the underlying pattern of a summer trough and an autumn rebuild is common across the sector.

Planning funding around that curve, rather than reacting to it in August, puts you in a stronger position. A line of credit or working capital facility arranged in spring gives you a buffer to protect wages and retain good staff through the quiet weeks, so you are fully staffed and ready when occupancy climbs again in September. Comparing offers early also means you are not borrowing in a hurry at whatever terms you can get.

The most common reason is simply timing: bridging the weeks between paying staff and receiving the termly local authority payment, or holding the line through the summer dip. Beyond cash flow, settings borrow to invest in capacity, because more registered places is the clearest route to more revenue. That might mean converting a room for under-twos, where ratios are tightest and demand is often strongest, or extending outdoor space to meet EYFS expectations.

Other frequent uses include refurbishing tired premises, upgrading a nursery kitchen to handle more meals, funding staff recruitment and retention in a tight labour market, adding software for parent communication and registers, or acquiring a second site. The expansion of funded hours to younger children has pushed many settings to add baby-room capacity, and funding is often what makes that possible before the extra fee income arrives.