What Funding Is Available for New Nursery Buildings in 2026? A Guide for Nursery Owners

Budget is the reason most nursery expansion plans stall, not the building itself. If you're a private, voluntary or independent (PVI) nursery operator, the funding landscape looks very different to the one schools and academies navigate, and most generic "school building funding" guides won't tell you what's actually open to you.

This guide sets out the funding routes that genuinely apply to nursery owners and operators in 2026, including where the big government capital programmes do and don't apply to private providers, and what to do instead when they don't.

Start here: most DfE capital grants are routed through schools, not private nurseries

This is the single most important thing for a private nursery operator to understand before spending time on an application. The Department for Education's flagship early years capital programme, the School-Based Nursery (SBN) Capital Grant, has funded the creation or expansion of nursery provision on school sites since 2024, with grants of up to £150,000 per project and almost £370 million committed to the programme through to 2030.

But eligibility sits with state-funded primary schools, maintained nursery schools, academies and multi-academy trusts - not with independent nursery businesses applying directly. From Phase 3 onward (covering 2027-2030), the route has changed again: individual schools can no longer apply directly at all. Local authorities now submit multi-year proposals covering several projects across their area, with a September 2026 deadline for those proposals.

Where this still matters for you as a private operator: PVI providers can be named as the delivery partner within a school's successful SBN bid, operating the nursery on a school site under contract. In the most recent funding round, PVI providers were named as the delivery partner in a meaningful minority of successful projects nationally. If you already have, or could build, a relationship with a local primary school that has surplus space, this partnership route is worth exploring directly with your local authority's early years team - but it requires the school to be the applicant, not you.

Local authority childcare expansion and wraparound capital funding

Separately from the SBN programme, local authorities have administered their own capital funding tied to the rollout of the expanded childcare entitlement and wraparound provision for school-aged children. Unlike the SBN grant, these schemes have historically been open to PVI providers applying directly, not just schools.

The catch is that this funding has moved in phases tied to government childcare policy milestones, and several local programmes - including the national wraparound childcare capital and revenue grants - wound down through 2025 and into March 2026 as the entitlement rollout completed. That doesn't mean the door is closed. Local authorities frequently introduce successor schemes to address ongoing undersupply in their area, particularly where demand still outstrips nursery places.

What to do: contact your local authority's early years and childcare team directly and ask what capital funding is currently open, rather than relying on what was available even six months ago. This is a fast-moving area, and the only reliable source is your LA's current guidance.

Charitable trusts and foundations

Beyond government routes, a number of charitable trusts and foundations fund early years capital projects, particularly where a nursery serves children in disadvantaged areas, supports SEND provision, or delivers outdoor learning environments. This route tends to fund part of a project rather than the whole thing, but it can be combined with other funding to close a gap.

This is worth pursuing if your project has a clear social impact angle - expanding places in an area of genuine undersupply, or building dedicated SEND or sensory provision into the design.

Here's some options for charitable trusts and foundations:

• The Wolfson Foundation: Provides capital grants for new builds and refurbishments. They typically fund educational settings working with disadvantaged children or those with special needs. 
• Garfield Weston Foundation: A major grant-maker in the UK that supports both capital building projects and core operating costs. 
• The Clothworkers' Foundation: Offers open capital grants for projects that benefit marginalized or disadvantaged communities. 
• Bernard Sunley Foundation: Provides capital grants between £10,000 and £5 million for registered charities and educational institutions.

Commercial finance: the route most private nurseries actually use

Because the largest capital grant programme is structured around schools rather than private operators, commercial finance remains the primary route for most independent nursery expansions. This typically takes one of three forms:

• Commercial finance: the route most private nurseries actually use
  
  • Because the largest capital grant programme is structured around schools rather than private operators, commercial finance remains the primary route for most independent nursery expansions. This typically takes one of three forms:
• Commercial mortgages or secured business loans, where the building or wider business asset is used as security
• Asset finance or lease-to-own arrangements, sometimes offered directly through a modular supplier as part of a phased payment structure
  
  • Phased, staged investment, where a build is delivered and paid for in stages aligned to your own cashflow cycle rather than as a single upfront cost

The advantage of working with a modular supplier on this route is cost predictability. Because so much of a modular build happens off-site, you're working with a fixed, known figure far earlier in the process than you would with a traditional build, which makes commercial lending conversations considerably more straightforward.

Section 106 and developer contributions

In areas experiencing significant new housing development, local planning authorities sometimes secure Section 106 contributions from developers specifically earmarked for new early years and childcare provision in the area, to offset the demand new housing creates. If your nursery sits in or near a growth area, it's worth asking your local authority's planning team whether any S106 funding has been allocated for early years provision, and whether there's a route for an existing or new private provider to access it.

A realistic funding checklist for 2026

• Establish your actual project cost first - see our nursery building cost guide for realistic 2026 figures.
• Contact your local authority's early years team and ask directly what's currently open to PVI providers, including any SBN partnership opportunities with local schools.
• Check whether any charitable trusts align with your project's social impact, particularly if it includes SEND or disadvantaged-area provision.
• Speak to your bank or a commercial finance broker early, using a fixed modular cost figure as the basis for the conversation.
• Ask your local planning authority whether Section 106 funding has been allocated for early years provision in your area.
• Consider whether a phased build, delivered and paid for in stages, fits your cashflow better than a single upfront cost.

None of these routes is guaranteed, and several of them take months to confirm. Starting the funding conversation early, in parallel with design and planning rather than after it, gives you the most options.

We work with nursery operators across the UK and understand which funding routes are realistically achievable for a project your size, in your area. We can also structure a phased build to align with funding cycles where that helps.

Get in touch for a free, no-obligation conversation about your project and what's genuinely fundable.