S-273-119
Placed on Senate Legislative Calendar under General Orders. Calendar No. 9.
Sponsored by Jacky Rosen (D-NV)
What it does
This bill would amend the Small Business Act and the Small Business Investment Act to allow qualifying nonprofit child care providers to access SBA 7(a) business loans and 504 long-term financing programs, which are currently limited to for-profit small businesses. To qualify, a nonprofit provider would need to be a 501(c)(3) organization, licensed by its state, primarily serving children from birth to compulsory school age, and compliant with federal background check requirements for employees and volunteers. Loans over $500,000 would require a third-party payment guarantee; loans at or below $500,000 would not. The SBA would be required to report annually to Congress on the number and dollar amount of loans made under this new authority.
Who benefits
Qualifying nonprofit child care organizations that currently cannot access SBA loan capital — including faith-affiliated nonprofits, community-based centers, and Head Start-adjacent providers. Working parents and families who depend on nonprofit child care, particularly in underserved or rural areas where nonprofit providers are often the primary or only option. Children from low- and moderate-income households who are disproportionately served by nonprofit providers. Private lenders (banks and certified development companies) who would gain a new category of SBA-guaranteed loan customers. Indirectly, employers whose workers depend on stable child care access.
Who is hurt
For-profit child care businesses that currently use SBA loans and may face increased competition from newly eligible nonprofit providers, which have tax-exempt status and may offer lower-cost services. Taxpayers who bear the risk of SBA loan guarantees if nonprofit borrowers default. Faith-based nonprofit providers whose religious activities are explicitly excluded from use of loan proceeds, potentially limiting their ability to integrate programming. Nonprofit providers that cannot meet the size standards, background check requirements, or nondiscrimination certification — including some smaller or religiously observant organizations — who would remain ineligible.
Supporters argue
Supporters argue that nonprofit child care providers serve the most vulnerable children and operate in markets where for-profit providers will not, yet they are arbitrarily excluded from the same SBA loan tools available to any small business. They contend that the U.S. child care sector has lost tens of thousands of slots since the COVID-19 pandemic, and that capital access is a documented barrier to expansion and facility improvement for nonprofits. By routing loans through private lenders with guarantees — rather than direct government lending — the bill uses an existing, proven mechanism that limits federal risk exposure while unlocking private capital for an underserved sector.
Opponents argue
Opponents argue that SBA programs were designed for profit-driven small businesses, and extending them to nonprofits — which already benefit from tax-exempt status, charitable donations, and government grants — blurs that mission and exposes the SBA guarantee fund to a new class of borrowers with different risk profiles. They contend that nonprofit child care providers have access to alternative capital sources such as CDFI loans, CCDBG block grant funds, and philanthropic financing, making SBA expansion duplicative. Critics also raise concerns that the nondiscrimination certification requirement, combined with the carve-out for First Amendment-protected religious activities, creates ambiguity that could generate litigation and administrative burden for both the SBA and applicant organizations.