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Intro To Business Loans For Gyms & Fitness
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 All you have to do is look around: You might notice outdated exercise machines, insufficient space for the number of members, or workout tools that have seen better days.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 much easier if it was 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:
What Are Business Loans For Gyms & Fitness Centers?
Business loans for gyms are specifically geared towards the cash flow cycles and recurrent gyms and fitness centers’ expenditures. Besides covering short-term needs and large purchases, business financing can help you maintain operations during slow periods.
Loans for gyms and fitness businesses can come in the form of:
- Business Term Loans
- SBA Loans
- Business Line of Credit
- Equipment Financing
- Working Capital Loans
- Merchant Cash Advance
- Revenue-Based Business Loan
- Accounts Receivable Factoring
How Do Business Loans For Gyms & Fitness Centers Work?
Each of the products listed above can suit a different type of expense or cash flow issue. For example, let’s say 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 SBA Loan. 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 even customize your terms to coincide with the amount of time it will take your investment to contribute to revenue.
For less expensive initiatives like ordering new workout tools, we might recommend a Business Line of Credit. You could order the machines just in time for a busy period and pay off your balance quickly, which significantly lowers your interest rate. 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 every time you need to order a new set of 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 be better suited for 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 more spread out, which will most likely happen due to the alternating busy and slow periods of fitness centers.
Gym & Fitness Loan Options Compared
|Loan types||Max Amounts||Rates||Speed|
|Merchant Cash Advance||$7.5k – $1m||Starting at 1.09||1-2 business days|
|SBA Loan||$50k-$10m||Starting at 5%||3-5 weeks|
|Business Term Loan||$10k to $5m||Starting at 5%||1-3 business days|
|Business Line of Credit||$10k to $250k||Starting at 8%||1-3 business days|
|Receivables/Invoice Factoring||$50k-$10m||Starting at 5.8%||1-2 weeks|
|Equipment Financing||Up to $5m per piece||Starting at 5%||3-10 business days|
|Revenue Based Business Loans||$10K – $5m||Starting at 9%||1-3 business days|
What Are The Advantages of Business Loans For Gyms?
Except for SBA Loans, most products United Capital Source has access to can be approved and distributed in a matter of 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 each other’s 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. When people view your gym as a hangout, they may be more likely to bring in more members since they can socialize with their friends after working out.
What Are The Disadvantages of Business Loans For Gyms?
Business loans can be particularly risky for gyms because most of their 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 is not necessarily going to 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.
Who Qualifies For Gym & Fitness Business Loans?
Approved businesses generally met the following criteria:
How To Apply For Gym & Fitness Business Loans:
The amount of paperwork required for the application depends on your chosen product. For most products, funds can be approved and distributed in up to three business days. Here’s how to apply:
Step 1: Choose the Right Product
The first step is choosing the most sensible solution to the problem at hand. This should require a decent amount of 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.
Step 2: Gather Your Documents
Here are the documents and information required for all gym & fitness business loans:
- Driver’s license
- Voided business check
- Bank statements from the past three months
- Invoice for equipment (for Equipment Financing)
- Credit card processing statements from the past three months (for Merchant Cash Advance)
- Accounts Receivable Aging Report (for Accounts Receivable Factoring)
- Accounts Receivable (for Accounts Receivable Factoring)
- Debt Schedule (for Accounts Receivable Factoring)
SBA Loans require additional documents and information. To learn what’s needed for the SBA Loan application, visit our SBA Loan page.
Step 3: Fill Out 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.
Step 4: Speak to a Representative
Once you apply, a representative will reach out to 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.
Step 5: Receive Approval
If and when you’re approved, funds for Business Term Loans, Business Lines of Credit, Working Capital Loans, Equipment Financing, Merchant Cash Advance, Revenue-Based Business Loans, and Accounts Receivable Factoring should then appear in your bank account in anywhere from 24 hours to one week. For SBA Loans, it usually takes 3-5 weeks to receive funding.
Your Business Financing Gets Set Up – Now What?
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 of 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.
What If I’m Declined For a Gym & Fitness Center Business Loan?
If we decline your application, it might be because you applied for the wrong product for your cash flow. In this case, we would likely recommend a different product with a less hazardous repayment structure.
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 even a personal loan. Both options can be accessed through UCS and are usually much easier to qualify for than business loans.
If your credit score is preventing you from accessing financing, you should consider our credit repair services. We can help you identify the issues that keep your score down and develop practical solutions for eliminating them.
People Also Ask:
Can I Get a Business Loan To Open a Gym?
Banks sometimes offer SBA 7(a) loans for new businesses. However, you’ll have to meet a series of requirements. 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.
Also, you must prove to the bank 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.
Can I Get a Business Loan To Buy a Gym?
Yes, many business loan providers approve loans for purchasing existing businesses. However, this is only possible if you’re currently running 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 before.
What Kind of Gym Equipment Can I Finance?
Business loans can be used to purchase more substantial pieces of equipment like exercise machines and smaller workout tools like weights, dumbbells, or Swiss balls. Specific examples of stuff you might finance include:
- Exercise bikes
- Rowing machines
- Heavy bags
- Pilates equipment
- Strength training equipment
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 that is approximately equal to the equipment’s value. Your terms will also be based on the equipment’s lifespan, i.e., how long it will take to become outdated or irrelevant.
Can I Get a Loan For a Gym Business With Bad Credit?
Yes, six of the eight products mentioned above are accessible for borrowers with bad credit. Your rates may be higher, and your terms may be shorter because bad credit makes you more likely to default. However, if you have strong cash flow or can provide collateral, your bad credit may have less impact on your rates and terms. We can also customize your terms and payment frequency to ensure that you can make payments while staying current on other bills.
For some products, your credit score is irrelevant. Approval for a Merchant Cash Advance is based on your debit and credit card sales volume. With Accounts Receivable Factoring, approval depends on your customer’s creditworthiness, not your own.
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.