Home / Industries / How Much Does It Cost to Start an Adult Day Care Center? (2026 Costs, Licensing & SBA Financing)

How Much Does It Cost to Start an Adult Day Care Center?

Reviewed by Muhammad Tayyab Shabbir · Last updated 12 October 2026

On the line items we build below, an adult day care center opens for somewhere between $85,000 and $829,000. A social-model center in leased space that already meets code, with no vehicle and no occupancy upgrade, sits near $85,000; an adult day health center needing licensed nursing staff, a commercial kitchen, a Group I-4 occupancy upgrade and a transport vehicle reaches the top. Strip out the optional vehicle and the occupancy uplift and the same table runs $85,000 to $554,000. The biggest driver is not licensing: the first-year state fees we could verify run from $10 to $1,075. It is the building, plus the working capital to survive the gap between opening and your first Medicaid payment.

Verify before you commit capital. Adult day care is licensed state by state, and fees, ratios and reimbursement rates change every legislative session. Externally sourced figures below carry a named, dated source; figures that are our own planning judgment are labeled as such. Confirm current requirements with your own state licensing agency and your state Medicaid office before signing a lease or a loan.

Cost to start an adult day care center at a glance

Totals are the arithmetic sum of the column above them, with no row rounded before summing; the figures in the opening paragraph are those totals rounded down to the nearest $1,000. We have not found an independent national dataset of adult day care startup costs. The three fee rows are sourced to statute, state rule or agency notice, and no one center pays all three High figures. Every row marked "our own estimate" is exactly that: a build-up from the engagements we run at Business Plan Firm, current as of 22 August 2026, not a survey, not a sample with a published methodology, and not a figure you should present to a lender as third-party evidence. Test each one against local quotes before you rely on it.

What drives the cost of opening an adult day care center?

The occupancy classification of your building. Under the International Building Code, Institutional Group I-4 covers buildings occupied by more than five people receiving custodial care for fewer than 24 hours a day, and adult care facilities are named within it (IBC, Group I-4 Day Care Facilities, via UpCodes, retrieved 22 August 2026).

How that plays out in practice is set by the fire code your own state has adopted, and states amend it. Ask your state fire marshal which classification your intended participant mix triggers before you sign anything, because that single decision drives sprinklers, corridor widths, door hardware and alarms.

Whether you must serve meals. Florida requires participants attending four or more hours to receive meals providing at least one-third of the Dietary Reference Intakes (Fla. Admin. Code R. 59A-16.105, retrieved 22 August 2026). Catering is cheap; an in-house commercial kitchen means grease interceptors, hoods, three-compartment sinks and health department plan review.

Staffing ratios. Florida requires one direct-service staff member for every six participants, and never fewer than two staff on duty, one of them holding a certification in an approved first aid course and CPR (Fla. Admin. Code R. 59A-16.102, retrieved 22 August 2026). Georgia sets a single flat floor of one staff member or volunteer to every eight participants (Ga. Comp. R. & Regs. 111-8-1-.13, retrieved 22 August 2026). The two-staff floor matters more than operators expect: in Florida the same two staff are required whether one participant attends or twelve, so minimum staffing does not fall when attendance is low.

ADA and accessibility work, turning radii, accessible restrooms, ramps, parking. In our experience finding a compliant property is the longest pole in the project.

Social model or adult day health? The fork that sets your budget

A social model center provides supervision, socialization, personal care, activities and nutrition. It generally needs no licensed nurse and often falls under a lighter registration regime. In New York City it operates on registration with NYC Aging, a $900 fee (NYC Aging, Social Adult Day Care registration, retrieved 22 August 2026), rather than full health facility licensure. An adult day health center (ADHC, DAHS in Texas, CBAS in California) adds skilled nursing, therapy and medical monitoring, carrying nurse staffing costs from day one and, in most states, a health facility license.

This matters for revenue, not comfort: the model determines which Medicaid authority you can bill and what your per-diem is worth. Choosing social model because it is cheaper to build, then finding the state waiver only reimburses the health model at a viable rate, is the most expensive single mistake we see in this sector.

How do you get licensed, and what does the state actually charge?

License fees are small and vary by state. Five examples, retrieved 11 October 2026:

• Arizona (Dept. of Health Services): no figure we can call current. The retrievable copy of Ariz. Admin. Code R9-10-106 (Legal Information Institute, history ending 15 April 2022) sets a $50 application fee and $280 for an adult day health care facility with no licensed capacity. But a June 2025 ADHS draft says the agency plans to revise the rules in 9 A.A.C. 10, Article 1 to increase the application and licensing fees, and the official code blocked automated retrieval on 11 October 2026. Ask ADHS.
• Florida (Agency for Health Care Administration): the statute does not name a dollar figure. It provides that The amount of the fee shall be established by rule and may not exceed $150. Counties and municipalities are exempt: County-operated or municipally operated centers applying for licensure under this part are exempt from the payment of license fees. Source: Fla. Stat. §429.907(3)-(4), 2026 Florida Statutes. That ceiling is not necessarily the amount AHCA charges: subsection (3) opens In accordance with s. 408.805, and Fla. Stat. §408.805(2) says The agency shall annually adjust licensure fees, including fees paid per bed, by not more than the change in the Consumer Price Index based on the 12 months immediately preceding the increase. We could not retrieve the amount AHCA charges today (its site blocked automated retrieval on 11 October 2026); ask AHCA.
• Texas (HHSC): Day Activity and Health Services (DAHS) applications are submitted online through TULIP. The license fee is $75 for a three-year license. Plan review of a new or converted building costs $12 per client (minimum $500 and maximum $1,000), and HHSC may deny an application that remains incomplete after 120 days. Source: 26 Tex. Admin. Code §559.37 and §559.11(d), text effective 10 July 2024.
• Pennsylvania (Dept. of Aging): an annual fee of $10 (four to 10 clients) to $40 (36 and over) (6 Pa. Code §11.252).
• Georgia (Dept. of Community Health): a $300 application processing fee on submission, plus the annual license fee up front, $250 (social) or $350 (medical) (Ga. Comp. R. & Regs. R. 111-8-25-.03(8), amended effective 10 March 2025).

If you intend to bill Medicaid, check whether the federal institutional provider enrollment application fee applies to you. CMS set that fee at $750.00 for calendar year 2026, for institutional providers initially enrolling in Medicare, Medicaid or CHIP on applications submitted from 1 January to 31 December 2026 (CMS notice CMS-6096-N, 90 FR 55738, published 3 December 2025, retrieved 11 October 2026). The fee is reset yearly, and no 2027 amount had been published by then. Read the applicability carefully: for Medicaid-only providers the notice reaches nursing facilities, ICF/IIDs and PRTFs, plus other institutional provider types a state designates. Whether adult day care is designated is a state-by-state question, so confirm it with your state Medicaid agency rather than assuming either way.

One state is currently closed to new applicants

Minnesota DHS imposed a temporary licensing moratorium on adult day services centers effective 1 February 2026, anticipated to run 24 months to 31 January 2028. DHS is not accepting new applications and canceled those already queued; the exception process runs on requests from lead agencies (counties and managed care organizations) or Tribal Nations, and a request will not guarantee a new license is issued. Source: MN DHS moratorium bulletin and news release, retrieved 22 August 2026; bulletin checked 11 October 2026.

How long does it take to get licensed and start getting paid?

Two clocks run, and they are not the same. We have not found a published national figure for either, so what follows is our own planning range from the engagements we run, not a surveyed or agency-published statistic: a starting assumption to test against your own state, not evidence.

• Licensure: in our experience, three to nine months from complete application, driven by construction and inspection rather than paperwork.
• Medicaid provider enrollment: in our experience, a further 30 to 90 days after licensure, varying by state and by the risk level assigned to your provider type.
• Cash: adding claims adjudication, we plan client models on 90 to 180 days between opening and receiving meaningful cash.

This is the line first-time operators under-fund.

Two structural points about the revenue. First, waiver participants must clear a level-of-care test you do not control: federal rules require the state agency to evaluate whether a beneficiary needs the level of care provided in a hospital, nursing facility or ICF/IID, with reevaluations at least annually (42 CFR §441.302(c), retrieved 22 August 2026). Your census therefore depends on assessments made by other people. Second, per-diems are set state by state and frequently sit below private-pay rates: South Carolina, for example, set its adult day health care rate at $80 per day for dates of service on or after 1 October 2025 (SCDHHS, retrieved 22 August 2026). Your facility must also satisfy the federal HCBS Settings Rule at 42 CFR §441.301(c)(4), which governs community access, privacy, autonomy and choice and carries design implications.

How do people finance an adult day care center?

SBA business loans are for for-profit operators: 13 CFR §120.110(a) lists Non-profit businesses (for-profit subsidiaries are eligible) among businesses ineligible for SBA business loans (retrieved 22 August 2026, checked again 11 October 2026). A for-profit adult day care center is not excluded by type, though eligibility turns on the applicant and the lender. The current rulebook is SOP 50 10 8.1, effective 1 October 2026, which replaced SOP 50 10 8. Under it:

• 7(a) covers working capital, inventory, supplies, equipment and leasehold improvements (Section A, Chapter 3). SBA requires an equity injection of at least 10% of total project costs for a start-up: a business in operation (i.e., generating revenue from intended operations) for 1 year or less. The SOP prints that rule for Standard 7(a) loans and again for 7(a) Small loans; on an SBA Express loan, whether to require an injection is left to the business judgment of the Lender (SOP 50 10 8.1, Section B, Chapters 1 and 2; 13 CFR §120.150, which the SOP cites, sets no percentage). See SBA equity injection requirements.
• 504 funds owner-occupied real estate and long-term build-out. A New Business must contribute at least 15%, and that is not the 7(a) start-up test: Appendix 3 defines a New Business as one in operation for 2 years or less at the time the loan is approved, and adds: Operations are deemed to begin when the business begins generating revenue from its intended operations. A business with a Limited or Special Purpose Property must also contribute at least 15%; if the project is both, 20%, with the debenture financing no more than 30% and at least 50% of the financing coming from state or local government, banks or other financial institutions, foundations or other non-profit institutions (SOP 50 10 8.1, Section C, Chapter 1, Paragraph E.1.c, Borrower's Contribution; 13 CFR §120.910). See SBA 504 loan requirements.

Is adult day care a "special purpose" property? This is worth 5 points of equity. SOP 50 10 8.1 defines a Limited or Special Purpose Property as a limited-market property with a unique physical design, special construction materials, or a layout that restricts its utility to the use for which it was built (Appendix 3, Definitions). Its list of examples (Section C, Chapter 1, Paragraph E.1.c) names Nursing homes, including assisted living facilities and Hospitals, surgery centers, urgent care centers, and other health or medical facilities, but does not name adult day care: a full-text search of SOP 50 10 8.1 on 11 October 2026 returns no occurrence of the phrase adult day. That list is not intended to be all-inclusive and SBA may determine that other properties meet the Limited or Special Purpose Property definition, and CDCs must address whether the Project Property is Limited or Special Purpose in their credit memorandum and include an explanation of their conclusion. Our reading, not SBA's: a social-model center in flexible space has a strong argument it is not special purpose, while a heavily built-out adult day health center may fall into the health or medical facilities bucket. Get your CDC's read in writing before modeling your injection.

For 7(a) loans the SOP's license deadline falls after funding: The Lender must obtain evidence from the Borrower of all licenses required to operate the business within no more than 90 days after final disbursement of the loan. SBA Express, Export Express and 7(a) Small loans have a separate paragraph (Section B, Chapter 6), under which conditions such as business licenses are met before disbursement. Ask your lender which applies, and consider a lease contingent on licensure.

What do the operating economics look like?

The national median daily rate for adult day health care is $95 per day, and that figure declined 5% in 2025: the only long-term care setting in the survey to fall (CareScout 2025 Cost of Care Survey, released 2 March 2026, retrieved 22 August 2026).

Read that decline carefully: it signals pricing pressure in a sector where demand is rising. Model on daily census, not capacity. Because ratios and the two-staff minimum make payroll close to fixed at low volumes, contribution per participant is high once you clear your floor and brutal below it. Our own planning heuristic, a rule of thumb from the engagements we run, not a published study, is that most operators need consistent attendance at 60-80% of licensed capacity. Build your own break-even from your state's per-diem and your own wage quotes rather than adopting that band.

What makes adult day care projects fail?

Patterns we see in client work, not a ranked list from published research.

• Under-funded working capital. Licensed, open, full, and out of cash in month three waiting on claims.
• Signing a lease before code review. The building decides the budget. Get an architect and the fire marshal's read first.
• Assuming the license is permission to bill. Provider enrollment is separate.
• Building for a census you have not sourced. Referrals come from case managers, discharge planners and area agencies on aging; those relationships take months.
• Ignoring transport. In many markets participants cannot attend without it, and a vehicle plus driver carries its own insurance.

Is this actually viable for you? Sometimes the answer is no

The thresholds in this section are Business Plan Firm's opinion, formed from client engagements. They are not regulatory tests and no agency endorses them.

Capital. In our view, if your available capital is under $75,000 and you have no property, this is likely not your business right now: our judgment, not an SBA or state rule. What is a rule: under SOP 50 10 8.1 the 7(a) start-up equity injection is at least 10% of total project costs, and a 504 New Business contributes at least 15%. If the whole cost table is the project, that 10% is $8,501 on the Low total and $82,972.50 on the High.

Geography. Minnesota's moratorium on new adult day licenses has an anticipated duration of 24 months, ending January 31, 2028, exceptions aside: that one is documented, not an opinion. If your state's per-diem is at the low end and your local wage market at the high end, the arithmetic may not close.

Referrals and temperament. Without relationships with discharge planners, case managers or your area agency on aging, our advice is to budget six months to build them or accept a long ramp. And this is a regulated healthcare business with inspections, care plans, incident reporting and audit exposure, not hospitality with an activities calendar. Our view: if two or more of these tests fail, delay rather than shrink the budget. Under-capitalized centers here do not fail cheaply.

Frequently asked questions

How much does an adult day care license cost?

Adult day care license fees we verified in state rules: Pennsylvania $10 to $40 a year, Texas $75 for a three-year license plus up to $1,000 for plan review of a new or converted building, and Georgia $300 to apply plus $250 or $350 a year. Add the CMS $750 fee if your state designates adult day care as an institutional Medicaid provider type.

Can you get an SBA loan for an adult day care center?

Generally yes for a for-profit center; non-profit businesses are ineligible for SBA business loans under 13 CFR §120.110(a). SOP 50 10 8.1 requires a minimum 10% equity injection on Standard 7(a) and 7(a) Small loans to start-ups (1 year or less in operation). A 504 New Business (2 years or less at approval) contributes at least 15%, or 20% if the property is Limited or Special Purpose.

Is adult day care a special purpose property under SBA rules?

Not by name: the phrase "adult day" does not appear anywhere in SOP 50 10 8.1, the rulebook in effect since 1 October 2026. But the example list is expressly not all-inclusive, SBA may determine that other properties meet the definition, and the CDC must address the question in its credit memorandum and explain its conclusion. Ask your CDC for that conclusion in writing before you model your contribution.

How long does Medicaid provider enrollment take?

We plan on 30 to 90 days after licensure, varying by state and by the risk level assigned to your provider type. That is our own planning range from client engagements, not an agency-published figure, and it runs separately from licensure. Ask your state Medicaid agency for its current published processing times.

How many participants do you need to break even?

It depends on your per-diem and fixed staffing, but structure matters more than the number. Because states impose minimum ratios and, in states like Florida, at least two staff on duty regardless of census, payroll is close to fixed at low volumes. Our own rule of thumb, not a published statistic, is 60-80% of licensed capacity. Build the calculation from your own state rate and wage quotes.

Can you open an adult day care center in Minnesota right now?

No. Minnesota DHS imposed a temporary licensing moratorium on adult day services centers effective 1 February 2026, expected to run roughly 24 months to 31 January 2028. New applications are not accepted and queued applications were canceled. The only route DHS describes is an exception requested by a county, managed care organization or Tribal Nation, and a request does not guarantee a license.

What your plan should show

Our recommendations, not a statement of what a lender or CDC will ask for:

• A defined care model, licensure pathway and named referral sources
• Monthly projections built on daily census ramp, with payer mix split between Medicaid and private pay
• Evidence of your equity injection, at least 10% of total project costs for a 7(a) start-up, 15% or 20% for a 504 New Business, documented
• The lease or purchase contract plus a build-out estimate tied to your occupancy classification
• State license and Medicaid provider enrollment application status, plus management résumés showing regulated-care operating experience
• A working capital schedule that explicitly funds the reimbursement lag

Business Plan Firm is the US practice of Avvale, a London consultancy. We have produced $1B+ in funding documents for 500+ businesses across 30+ countries, including Shark Tank and Dragons' Den clients.

Book a free 30-minute call

Before you commit capital, verify current requirements with your state licensing agency and your state Medicaid office.

Written by Muhammad Tayyab Shabbir, UCL, published textbook author. Last updated 12 October 2026. The SBA rules were checked on 11 October 2026 against SOP 50 10 8.1 (effective 1 October 2026) and 13 CFR §120.110, §120.150 and §120.910; other external sources carry their retrieval dates above. General information, not legal, financial or licensing advice. Confirm all requirements with your state licensing agency and Medicaid office before committing capital.

Related cost guides