It’s not hard to spot a gym with cash flow issues. All you have to do is look around: You might notice outdated exercise machines, insufficient space for the number of members, or workout tools that have seen better days.
Buying equipment and adding space would probably be easier if not for the fitness industry’s monthly payment structure. The lack of daily income makes it difficult to save money, and most gyms would likely lose a lot of business by raising their prices. United Capital Source has access to business loans for fitness and gyms looking to update their appearance, spread brand awareness, and establish additional revenue sources.
In this guide, we’ll answer the following questions and more:
Business loans for gyms are specifically geared towards the cash flow cycles and recurrent expenditures of gyms and fitness centers. Besides covering short-term needs and large purchases, business financing can help you maintain operations during slow periods. These options support small businesses, such as gyms.
The type of gym loan you get often depends on your business needs. Loans for gyms and fitness businesses can come in the form of:
Each product listed above can suit a different type of expense or cash flow issue. For example, you need to replace some equipment or install new flooring. Since this is a long-term investment, we might recommend a Business Term Loan, Equipment Financing, or an SBA Loan.
Finding the best loan program for your fitness business dreams depends on your needs. Equipment financing is one of the most valuable programs for gym owners as it provides funding for the primary equipment that customers come to your gym to use.
As gym goers expect more modern and innovative equipment, having the latest options is essential to stay competitive. Digital fitness technology is increasingly important as gyms adapt to hybrid workout environments. Equipment financing can help ensure you have new gym equipment to satisfy customer demand.
Unlike your bank, you don’t need entirely consistent cash flow or a massive bank balance to access these three products from United Capital Source. After all, the best time to begin renovations is during the slow season. We can customize your repayment terms to coincide with the time it takes for your investment to generate revenue.
Many visitors also look for gyms or fitness centers offering personal training services to meet their fitness goals. However, adding more employees can be a significant expense. Working capital loans can help with payroll costs to hire and onboard personal trainers.
We might recommend a business line of credit for less expensive initiatives like ordering new workout tools. You could order the machines just in time for a busy period and pay off your balance quickly, significantly lowering your interest rate. Most lines of credit are unsecured, but some lenders offer an asset-based line of credit, backed by gym equipment.
And as long as you pay back what you borrow, that money becomes available again. To clarify, you wouldn’t have to continuously apply for funding whenever you need to order new weights, dumbbells, etc.
Many gyms have added smoothie bars, vending machines, or retail items like shirts or water bottles to increase daily income. These investments might better suit a merchant cash advance or revenue based business loan.
Payments for both options will be minimal until they start contributing to revenue. They are also cheaper when payments are spread out, which will most likely happen due to the alternating busy and slow periods of fitness centers.
Small business owners seeking funding for larger investments, such as purchasing an existing fitness center or commercial real estate for their gym, should consider SBA loans or business term loans. Both options likely require collateral, a solid business plan, and excellent credit.
The Small Business Administration backs SBA loans, which often come with low interest rates and longer repayment periods. SBA loans offer a maximum loan amount of $5 million, while an SBA Express loan has a maximum of $500k. SBA loan interest rates are often tied to the Prime lending index.
| LOAN TYPES | MAX AMOUNTS | RATES | SPEED |
|---|---|---|---|
| Merchant Cash Advances | $7.5k – $1m | Starting at 1-6% p/mo | 1-2 business days |
| SBA Loan | $50k-$10m | Starting at Prime + 2.75% | 8-12 weeks |
| Business Term Loan | $10k to $5m | Starting at 1-4% p/mo | 1-3 business days |
| Business Line of Credit | $1k to $250k | Starting at 1% p/mo | 1-3 business days |
| Receivables/Invoice Financing | $10k-$10m | Starting at 1% p/mo | 1-2 weeks |
| Equipment Financing | Up to $5m per piece | Starting at 3.5% (SBA) | 3-10+ business days |
| Revenue Based Business Loans | $10K – $5m | Starting at 1-6% p/mo | 1-2 business days |
Except for SBA Loans, most products United Capital Source has access to can be approved and distributed in days. This allows gyms to replace equipment quickly and refurbish their appearance before they take their toll on memberships. The fitness industry is highly competitive, with each gym trying to undercut the others’ prices. Thus, members might be tempted to seek cheaper gyms if they see too many “out of order” signs on equipment or a general lack of upkeep.
Also, adding another revenue stream, like a smoothie bar, boosts profitability and gives you more cash for sudden expenses. The ultimate goal is for members to spend more time at your gym. People who view your gym as a hangout may be more likely to bring in more members since they can socialize with their friends after working out.
Business loans can be particularly risky for gyms because most investments will not dramatically increase their revenue. Gyms buy new equipment and maintain a clean appearance because they have to, not because they want to grow. In other words, a new set of treadmills will not necessarily bring in more members. For this reason, gyms cannot always rely on a future increase in revenue to help cover monthly payments.
Gyms also might struggle to keep a lot of money in the bank because they don’t generate revenue until the end of the month. This can impede their ability to continue making monthly payments during slower periods.
Pros:
Cons:
The amount of paperwork required for the application depends on your chosen product. Funds can be approved and distributed for most products in up to three business days. Here’s how to apply:
The first step is choosing the most sensible solution to the problem at hand. This should require some research, as each product is designed for different types of expenses and cash flow cycles. Are you looking to cover a short-term or long-term cost? Is demand expected to increase or decrease in the coming months?
Considering the funds’ purpose will also help us determine the correct borrowing and terms for your needs.
Here are the documents and information required for all gym & fitness business loans:
SBA loans require additional documents and information. Visit our SBA loan page to learn what’s needed for the application.
You can begin the application process by calling us or filling out our one-page online application. Either way, you’ll be asked to enter the information from the previous section along with your desired funding amount.
Once you apply, a representative will contact you to explain the repayment structure, rates, and terms of your available options. This way, you won’t have to worry about any surprises or hidden fees during repayment.
Underwriting approvals generally take less than 24 hours to process. SBA Loans usually take 3-5 weeks to approve.
Your business loan isn’t just a way to get financing for your business. It’s also an excellent opportunity to start building (or improving) your credit.
Regardless of the type of business loan you get, make all your required payments on time and in full. If you get a business credit line or another form of revolving credit, keep your balance below the credit limit.
Consistently making your business financing payments on time and in full will positively impact your credit. And that means preferred rates and terms when you next need business financing.
If your application is declined, you might have applied for the wrong product for your cash flow. We would likely recommend a different product with a less hazardous repayment structure in this case.
We might also decline your application after determining that you cannot afford to take on more debt at this time.
Instead, your needs and financial circumstances might be better suited for another financing tool, like a business credit card or personal loan. Both options can be accessed through UCS and are usually much easier to qualify for than business loans.
Banks sometimes offer SBA 7(a) loans for new businesses. SBA loans, like the 7(a) program, provide favorable terms and lower interest rates for gym owners.
However, you’ll have to meet a series of requirements for traditional financing options. For example, eligible borrowers must have reasonable equity to invest. Ideally, this means that you’re currently operating another profitable gym. But this could also mean investing with personal collateral, like real estate, when applying for traditional loans. You’ll also need good credit, detailed financial projections, and a clear understanding of your business to secure funding.
Also, you must prove to the bank that you have no other viable sources of financing. In other words, the bank will likely ask why you didn’t just use your savings account to fund the business or apply for a personal loan. Alternative fitness center loans have lower credit requirements than traditional bank loans.
Yes, many business loan providers approve loans for purchasing existing businesses. The initial cost of opening a gym can vary significantly based on concept and location. You’ll have to factor in other expenses, such as obtaining a business license or paying legal fees.
Gym franchises require an upfront cost ranging from $30,000 to $300,000. Due to the high real estate costs associated with gym operations, leasing gym property is common.
However, this is only possible if you run another business with strong cash flow and profitability. You’ll also need excellent credit and (most likely) collateral. Business loan providers rarely approve loans for buying existing businesses if you’ve never owned one.
Gym financing options include bank loans, personal savings, and finding a business partner. Traditional bank loans for gyms often come with relatively low interest rates if qualifications are met. Personal savings are the least expensive way to finance a gym, as there are no interest payments.
Business loans can be used to purchase more substantial equipment, such as exercise machines, and smaller workout tools, such as weights, dumbbells, or Swiss balls. Under SBA guidelines, gym equipment loans often require collateralization for amounts exceeding $25,000.
Specific examples of financing to purchase equipment and upgrade existing facilities:
It’s important to note that Equipment Financing is meant for more expensive pieces of equipment because the equipment usually serves as collateral. This allows you to borrow an amount approximately equal to the equipment’s value. Your terms will also be based on the equipment’s lifespan, i.e., how long it will become outdated or irrelevant.
Yes, six of the eight products mentioned above are accessible for borrowers with bad credit. Because bad credit makes you more likely to default, your rates may be higher, and your loan terms may be shorter. However, if you have strong cash flow or can provide collateral, your bad credit may impact your rates and terms less. We can customize your terms and payment frequency to ensure you can make payments while staying current on other bills.
For some products, your credit score is irrelevant. Approval for a Credit Card Processing Loan is based on your debit and credit card sales volume. With Accounts Receivable Factoring, approval depends on your customer’s creditworthiness, not yours.
The only product that is not accessible with bad credit is SBA loans. Compared to the other products, SBA loans carry higher borrowing limits, lower rates, and longer terms. If you have bad credit, you’ll be assigned shorter terms to ensure you repay the loan in full.
Fraud Disclosure:
Please be aware that individuals have been fraudulently misrepresenting to business owners (and others) that United Capital Source, Inc. (“UCS”) can assist small businesses in receiving government grants and other forgivable business loans, when in fact those grants or loans do not exist or are not available. These individuals have ulterior motives and are engaging in the unauthorized use of the names, trademarks, domain names, and logos of UCS in an attempt to commit fraud upon unsuspecting small business owners.
UCS will never communicate with a prospective client on Facebook, Facebook Messenger, or any other type of social media. Further, any email communications will always come from an official UCS email address and not a Gmail, Yahoo, or other email domain. If you believe you have been contacted by someone posing as an employee of UCS, please email [email protected].
