Fitness Center Feasibility Study in Nevada

Half franchised, and hard to close

Nevada's fitness lending is split evenly between brands and independents: franchise concepts make up 50.0% of the 118 SBA approvals recorded from FY2017 to FY2026, which together come to $64.5 million. The Nevada median of $302,250 is 1.17x the national fitness median, and the quartiles run from $100,000 to $632,500. The state ranks 29 of 54 for the class, the location quotient is 0.90x, and fitness is 5 of 39 among Nevada's classes. No single gauge, median, cancellation or charge-off, separates Nevada clearly from both Nevada lending overall and fitness nationally, but its outcome numbers deserve attention on their own.

Cancellations and early losses

First, cancellation. Of Nevada fitness approvals in FY2017 through FY2024, 17.8% were cancelled, and counting undisbursed loans leaves the ceiling at 17.8%, so a substantial share of borrowers who won a commitment never drew the money. Second, losses. Nevada's 37 gym loans funded in FY2017 to FY2021 have lost 10.8% to charge-off to date, and the share lost inside five years matches it at 10.8%, so every loss in the group came inside the first five years. Both figures are floors, and on a group this small a few more failures would move them a long way. For a lender, Nevada gyms fail early when they fail; for a borrower, the first years decide the loan.

Only 8 Nevada gym loans went through SBA 504, against 110 under SBA 7(a), so most Nevada gyms financed a leased build-out and equipment rather than a building. U.S. Bank, National Association holds 12 loans worth $4.7 million, while Zions Bancorporation, National Association holds 11 and The Huntington National Bank 10, each book worth $2.5 million. Newtek Bank, National Association holds 9 for $3.3 million and Newtek Small Business Finance, LLC 7 for $3.0 million. Approvals reached 22 in FY2023 and 16 worth $12.0 million in FY2026, after a low of 4 in FY2020.

What a Nevada fitness study has to test

Clark County holds 69 approvals and Washoe 41; outside Las Vegas and Reno the record is nearly empty, with Nye at 4 and Carson City, Douglas, Elko and Storey at 1 each. A feasibility study in Clark or Washoe has to measure the membership base a site can draw against the clubs and boutique studios already open, and it has to model churn honestly, because the charge-offs came early in a loan's life. The budget must include the franchisor's build standard, equipment leases and pre-opening marketing. Debt service coverage should be tested on a slow presale and a first year of attrition, not on the franchisor's average unit. The appraisal usually concerns leasehold improvements with little resale value, so the lender is relying on cash flow and the guarantor. Nevada fitness centers have a clean class definition, with no coding limitation and no shared code.