Decorating for a Spongebob Birthday Party?!?!?!
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What I would do is go with more of an ocean/beach/tropical theme as your basis and then add in SpongeBob.
--blue, green & clear balloons on the floor (or wall) to symbolize water & bubbles. Of course with young kids you'll have to make sure they don't pop and get put in mouths so you might want to tape a bunch of them to the wall in layers--darker colors on bottom and then clear on top. You could use turquoise and light green if you didn't want to do dark blue. Or wrap them around columns or posts if you have any where your party is held.
--you can use some pineapples in your decorations too, you could scoop one out and fill it with a fruit salad, etc. I would probably use this as a centerpiece, you could set it on a "bed" of sand even with other decorations around it
--for a tablecloth you could get a turquoise or light green one and put a net over it. I'm sure it wouldn't be too hard to find a piece of net somewhere, maybe a hunting/fishing shop. Or you could use a green paper one and fray the edges to look like a grass skirt!
--hand out leis to your guests, that is girly for sure
--you could dress your daughter in a grass skirt or even a tutu with a spongebob shirt
--for favors, you can get sand pails, some in girly colors, and fill them with bubbles, spongebob stickers, kid sunglasses (dollar store), those crabby patty candies (if they're old enough), etc. and of course they can take home their lei. I'll bet you can find some sand pails for next to nothing right now!
--If you can find any decorations that have the other characters on them, Patrick is pink, Sandy is a girl, Gary the snail is light colored w/ some purple I think.
a couple ideas came from amazingmoms.com and here on answers, rest were mine