Gym Loans

Guide to SBA Loans for Gyms and Fitness Facility Loans

Successfully operating a gym or fitness facility in today’s competitive market requires strategic planning, financial stability, and a clear vision for growth. Whether you’re launching a new gym from the ground up or expanding an existing fitness center, securing the right funding is essential to building a sustainable business. Small Business Administration (SBA) loans provide a valuable funding solution for gym owners, offering lower interest rates, extended repayment terms, and access to larger amounts of capital compared to traditional financing options.

For fitness entrepreneurs, a thorough understanding of SBA loans is critical to making informed financial decisions. This guide outlines key details, including available loan options, eligibility requirements, interest rates, and the application process, helping you determine if an SBA loan aligns with your business needs and long-term goals.

What Are SBA Loans?

The U.S. Small Business Administration (SBA) offers loan programs designed to support small businesses, including gyms and fitness facilities. While the SBA itself doesn’t lend money directly, it partners with approved lenders to make funding more accessible. By backing a portion of the loan, the SBA reduces the risk for lenders, making it easier for small business owners to qualify.

Key Aspects of SBA Loans

• Affordable Interest Rates: SBA loans offer competitive interest rates compared to other financing options, making repayment manageable for gym owners.
• Long Repayment Terms: Borrowers benefit from longer repayment terms, often up to 10–25 years, depending on the loan type and purpose.
• Access for New Businesses: Startups and newer gyms, often struggle to qualify for traditional financing, may have better access to funding through SBA loans.

Why Choose an SBA Loan for Gyms?

Traditional lenders often see gyms and fitness facilities as high-risk businesses, making it difficult to secure funding. High startup costs, fluctuating revenue in the early stages, and strong competition can create additional hurdles for fitness entrepreneurs. SBA loans help bridge this gap by providing accessible financing options with favorable terms, making it easier for gym owners to get the capital they need to start or grow their business.

Here’s why SBA loans are worth considering for gym business loans:

• Lower Interest Rates: Thanks to the SBA guarantee, lenders offer competitive interest rates for gym loans.
• Flexible Terms: SBA loans offer longer repayment periods, easing financial strain for gym owners.
• Larger Loan Amounts: Whether you’re purchasing gym equipment or renovating space, SBA loans can provide the capital to cover substantial costs.
• Support for Startups and Expansion: SBA loans are available to both new gym startups and existing facilities looking to scale operations.

Why SBA Loans Work for Gyms and Fitness Facilities

Gyms and fitness facilities have unique financial needs due to the heavy initial investment in equipment, rental space, and marketing. Here’s why SBA loans can be the perfect fit for the industry.

• Financing Large Upfront Costs: Opening a gym requires significant capital for purchasing fitness equipment, renovating leased spaces, and acquiring software like membership management systems. SBA loans, particularly the 7(a) Loan, offer flexible funding that can cover these big-ticket expenses.
• Steady Cash Flow Management: Fitness businesses often experience seasonal fluctuations in membership renewals. SBA loans can help smooth out these cash flow challenges, ensuring you can cover rent, employee salaries, and utilities year-round.
• Expansion Opportunities: If your gym or fitness center is doing well and you’re looking to expand to a second or third location, SBA loans can fund real estate purchases, construction, or additional equipment. The SBA 504 Loan is particularly suited for such real estate or infrastructure projects.
• Support for Small and Niche Fitness Businesses: Specialty gyms focused on niches like yoga, CrossFit, cycling, or martial arts may have difficulty obtaining traditional financing due to perceived risks. SBA loans can level the playing field, offering these businesses the chance to grow.

Types of SBA Loans for Gym Owners

The SBA provides multiple loan options, each suited to different financial needs.

1. SBA 7(a) Loan Program – The SBA 7(a) Loan is the most popular option for small business owners due to its flexibility. Features of the SBA 7(a) Loan include:

• Loan amounts up to $5 million.
• Terms up to 10 years for equipment or working capital and up to 25 years for real estate.
• Funds can be used for a variety of purposes, including equipment, real estate, inventory or staffing.

2. SBA 504 Loan Program – This loan focuses on fixed assets and is ideal for gyms planning to purchase or build facilities. Features of the SBA 504 Loan include:

• Loan amounts up to $15 million, with funding structured as 50% from a lender, 40% (up to $5.5 million) from a Certified Development Company (CDC), and at least 10% from the borrower.
• Designed for major expenses like real estate purchases, building renovations, or renovation of an existing gym facility.
• Typically lower interest rates with repayment terms of 10, 15, 20, or 25 years.

How to Apply for an SBA Gym Loan

Applying for an SBA gym loan requires careful preparation and a clear understanding of the loan process. Here’s a step-by-step guide to get you started:

Step 1. Investigate Loan Types – Each SBA loan type offers unique benefits depending on your business needs (see the section below for a detailed breakdown). Research whether an SBA 7(a) loan or SBA 504 loan would work best for your gym.

Step 2. Identify a Lender – Not all lenders administer SBA loans, so ensure you choose an SBA-approved lender. Banks are common options for securing an SBA loan.

Step 3. Prepare Your Business Plan – A solid business plan is crucial when applying for gym business loans. A well-drafted business plan reassures lenders about your gym’s potential success. Your plan should clearly outline:

• Your proposed gym services (e.g., personal training, group classes, etc.).
• Industry research, including gym demand in your area.
• Financial projections.

Step 4. Gather Required Documents – Compile all documents required for SBA applications. These documents demonstrate your financial responsibility and business credentials. These typically include:

• Tax returns (both personal and business)
• Business licenses
• Profit-and-loss statements
• A resume showcasing your industry experience

Step 5. Submit Your Application – Work with your lender to submit the SBA loan application. Be prepared to answer follow-up questions or provide any additional required documentation.

Requirements for an SBA Gym Loan

SBA loans for gyms and fitness businesses impose clear eligibility criteria and meeting them is critical for approval. While requirements can vary between lenders, here are the general qualifying factors:

General SBA Loan Requirements

• Business Size: Your gym or fitness facility must qualify as a small business under SBA guidelines.
• Credit Score: A strong personal credit score (typically 650 and above) gives lenders confidence in your repayment capability.
• Business Experience: Lenders may expect prior experience in fitness management or the gym industry.
• Down Payment: New gym owners typically need a down payment (often 10%–20% of the loan amount).

Financial Requirements

• Cash Flow: You must demonstrate sufficient cash flow or revenue to afford monthly loan payments.
• Debt-to-Income Ratio: Business owners with lower debt-to-income ratios are more likely to secure approval.
• Collateral: Some loans may require physical collateral (like gym equipment or real estate) as a guarantee for repayment.

Industry-Specific Considerations

For athletic facility loans, lenders may assess:

• Customer membership projections.
• Your competition in the area.
• The quality of your gym’s equipment and infrastructure.

Rates for SBA Gym Loans

Interest rates for SBA loans vary based on the loan type, loan amount, and market conditions. While SBA loans offer competitive rates, comparing rate offerings and loan structuring from different lenders will ensure you’re getting the loan that works for your fitness business.

Make Smart Financing Decisions

Whether you’re opening your first gym or scaling operations, securing the right fitness business loan is a game-changer. SBA loans offer gym owners access to funding with accommodating terms and expert support. Whether you are looking to finance new gym equipment or open a premium athletic facility, the right SBA loan can help you build or expand a thriving fitness business.

If you’re ready to take the next step toward achieving your goals, start exploring your options with qualified SBA lenders. By doing so, you’ll set your fitness facility up for long-term success.

About First Bank of the Lake

The friendly financial experts at First Bank of the Lake offer SBA loans designed with the needs of our customers in mind. We financed more than $500 million in SBA loans over the past 12 months and are ranked as the 14th largest SBA lender in the United States. Since our founding in October 1985, we have offered outstanding customer service and the best financial options for their needs. Today, First Bank of the Lake offers loans for business enterprises across the United States. To learn more about our bank or to apply for an SBA loan, visit our website or check us out on Facebook or LinkedIn. Our friendly and knowledgeable staff members will be happy to discuss your loan options with you and to help you achieve the highest degree of success in your chosen industry. Please contact us at (888) 828-5689 to get your business loan questions answered today!