Fitness Center Feasibility Study in California

California gyms: ordinary loan size, heavy losses

California approved 1,210 SBA loans to fitness centers from FY2017 to FY2026, for $563.5 million, ranking 2 of 54 among states. The class ranks 8 of 39 within California, and its location quotient of 0.76x means gyms are a smaller part of the state's SBA lending than of the nation's. The typical loan is not unusual. At $260,500 the median equals the national median for the class, 1.00x, and the middle half falls between $106,000 and $500,000. What does mark this cell, against both California across all classes and fitness centers nationally, is how often the loans have failed.

Of 437 California fitness loans disbursed in FY2017 to FY2021, 12.1% have been charged off to date, and 8.0% were lost inside five years of approval. Such a loss floor sits far above California's floor for all classes and above the class nationally, and it can still rise as open loans age. Part of that cohort lived through the closures of 2020 and 2021, when approvals fell to 52 in FY2021, but the record cannot separate that shock from the business model. Cancellation sits near normal at 13.8% of FY2017 to FY2024 approvals, or 15.2% counting loans still undisbursed. Lending has since come back hard: 162 loans in FY2024, 203 for $99.3 million in FY2025, and 166 in FY2026.

Franchise studios and a 7(a) book

Franchise operators hold 42.7% of the loans, and 1,138 of the 1,210 went through 7(a) against 72 under 504, so this is mostly a business loan market, not a real estate one. The Huntington National Bank leads with 149 loans for $41.6 million, then Wells Fargo Bank National Association (93 loans), U.S. Bank, National Association (75), Newtek Bank, National Association (65) and CDC Small Business Finance Corp. (55). The largest 504 lender by count is The Mortgage Capital Development Corporation, 14 loans for $30.0 million. Los Angeles (250 loans), San Diego (152) and Orange (128) lead the counties.

What a California fitness study has to answer

A lender here is underwriting churn as much as rent. The study should build demand from the members a site can sign within a short drive, net of the gyms and studios already there, and model monthly attrition explicitly rather than a steady membership count. Cost has to separate build out, which the operator loses if the gym closes, from equipment, which is often leased or financed apart. Test debt service coverage on presale numbers and an attrition rate above the franchisor's average, since that is the risk this loss floor reflects. With so few 504 deals, the appraisal will rarely carry the loan; cash flow and the guarantor will.

The fitness class has no special limitation line. Its loans are coded by the industry each borrower reported, and the rates here are approval cohort floors.