Fitness Center Feasibility Study in Minnesota

Minnesota gyms: modest loans, fewer cancellations

Fitness is a leading class in Minnesota's SBA lending, placing 4 of 39 among Minnesota classes, with 370 approvals worth $134.4 million over FY2017 to FY2026. Nationally the state sits 13 of 54 for gym loans, and its location quotient of 1.05x puts fitness close to its national weight. Loans are smaller than the class norm: the median is $200,750, 0.77x the gym median nationally, while the central half of approvals spans $66,175 to $409,600. Approvals here also tended to reach funding: only 7.0% of Minnesota gym approvals from FY2017 to FY2024 are known to have been cancelled, 8.7% on the ceiling that counts undrawn loans. None of the headline figures is flagged against both Minnesota as a whole and fitness centers nationally.

Who finances Minnesota fitness

Franchise clubs account for 47.6% of loans. SBA 7(a) carried 327 of them and SBA 504 carried 43. Twin Cities-Metro Certified Development Company holds 17 of the 504 loans, $15.9 million, and Midwest Business Finance Corporation holds 11. The Huntington National Bank holds the most loans, 36, but its lead is narrow: Old National Bank holds 28 worth $15.3 million, U.S. Bank, National Association 21 and Choice Financial Group 18. Hennepin County, with 126 loans, outweighs the next county, Dakota at 47, by a wide margin. The busiest year was FY2017 with 60 loans and $22.5 million; FY2024 brought the most dollars of recent years at $19.8 million.

Losses and the feasibility test

Of the 183 Minnesota gym loans disbursed in FY2017 to FY2021, 5.5% have been charged off so far and 2.2% within five years, floors that will move as open loans season. For a borrower, a club financed near the $200,750 median has less cushion than its size suggests. A feasibility study for a Minnesota fitness center has to measure the adult population within a realistic drive and the clubs, studios and community centers already competing for it, cost the build-out and equipment, and show debt service coverage through a membership ramp. Franchise buyers in Minnesota should press for unit results from nearby clubs of the same brand. Where a building is bought, the appraiser will value it as general commercial space, so the study should not assume the business lifts its value.

No class limitation is attached to fitness centers. Both rates on this page are floors.