Fitness Center Feasibility Study in Massachusetts

In Massachusetts, the fitness loan that fails usually fails before it funds. Cancellation after approval is where this cell breaks from the state's own record and from gyms nationally: 17.2% of the FY2017 to FY2024 approval cohort was cancelled, and if loans still waiting to disburse are counted the share reaches 20.0%. Both run above the Massachusetts all class rate and above the class across the country. Across FY2017 to FY2026 the state approved 378 fitness loans for $169.5 million, 12 of 54 among states, and gyms rank 4 of 39 among the state's classes, with a location quotient of 1.02x.

Better results once the money is out

The loans that do close have done better than fitness loans elsewhere. Of 146 disbursed in FY2017 to FY2021, 4.8% have been charged off to date and 2.1% inside five years. That floor is below the class nationally, though somewhat above Massachusetts across classes, and it remains a floor. Loan size is moderate: the median is $217,500, or 0.84x the national median for gyms, with the middle half from $56,700 to $500,000. The count fell to 16 in FY2021, then recovered to 48 in FY2024 and 43 in FY2026.

Lenders on both programs

SBA 504 has a real presence here, with 49 loans against 329 under 7(a). Granite State Economic Development Corporation (16 loans, $21.0 million), New England Certified Development Corporation (13 loans, $23.7 million) and Bay Colony Development Corporation (13 loans, $15.0 million) lead the 504 table. On the 7(a) side Eastern Bank has 48 loans for $6.5 million and Rockland Trust Company 34 for $7.4 million, ahead of TD Bank, National Association (23), Salem Five Cents Savings Bank (14) and Webster Five Cents Savings Bank (12). Franchise units account for 31.2% of loans. Middlesex (91), Norfolk (69) and Essex (48) are the leading counties, with Suffolk and Worcester at 41 each.

Testing the gap between approval and closing

Because so many Massachusetts approvals never fund, a feasibility study here should test what happens between commitment and closing. That means a signed or near final lease with the landlord's work letter, firm contractor bids for the build out, permits on a realistic timeline, and an equity injection the borrower can actually show. Demand still has to be proven, member by member, against the clubs and studios nearby. Run debt service coverage through a slower membership ramp than the franchisor projects. If the deal is a 504 purchase, the appraisal needs comparable sales for fitness or flex buildings and an opinion of value if the gym leaves.

No limitation line applies to the fitness class; each loan carries the industry code its borrower gave, and every rate shown is a cohort floor.