Seven parents donated a total of £3,000 of their own money to Chatterbox Children's Nursery in Cwmbran, Gwent, after it closed on 10 July.
Nursery owner Tracey Coslett wrote to the parents of each of the 26 children at the setting on 7 July informing them that the nursery would have to close after it fell into arrears.
The number of children at the nursery, which is located on an industrial estate, fell after some parents could no longer pay their fees due to wage reductions and redundancies. At the time of closure, each member of staff was owed three weeks' pay.
Along with the donations from parents, the nursery's landlord has agreed for the setting to pay no rent until October, and Ms Coslett has been able to pay all of its outstanding bills.
Nursery staff have also agreed to take a temporary pay cut to help the setting build up some cash reserves.
Ms Coslett said, 'It was overwhelming when the parents donated so much money. We still need a higher intake of children but we are in a better position than before.
'We have no rent to pay and there are more parents coming to look around. I have been trying to cut costs everywhere to create a safety net.'
Jayde Scard, whose one-year-old son attends Chatterbox Children's Nursery, and who donated money for the nursery to be saved, said, 'I cried for a week when I got the letter saying that the nursery was going to close.
'I have been to visit other nurseries but none of them compare - it's bright, airy and the staff are so friendly, you are happy as soon as you walk in.'
She added, 'A group of parents including myself clubbed together and donated money and we are over the moon that the nursery has reopened.'
