Fitness Center Feasibility Study in North Carolina

Fitness is a heavyweight in North Carolina's SBA lending. The location quotient is 1.41x, meaning gyms claim an outsized slice of North Carolina's SBA loans; inside the state the class ranks 4 of 39. North Carolina approved 381 fitness loans for $212.1 million from FY2017 to FY2026, 11 of 54 among states. Loans run large for the class: the median is $348,000, or 1.34x the national median; half of all loans fall in a middle band of $147,200 to $678,000. Against North Carolina's own record, though, the median does not clear our margin, so by our test it does not single out this cell; concentration and franchise weight do.

A franchise market

Franchise operators hold 55.9% of North Carolina fitness loans, a majority, and the program mix is almost all 7(a): 366 loans against 15 under 504. The Huntington National Bank leads with 57 loans for $18.5 million, then Wells Fargo Bank National Association (23 loans, $6.4 million), TowneBank (20 loans, $12.6 million), United Community Bank (16 loans, $14.7 million) and Pinnacle Bank (14 loans, $10.4 million). Lending is concentrated in Wake (96 loans) and Mecklenburg (90); the next counties, Durham and Guilford, have 17 each, and Buncombe 16. Volume has grown, from 33 loans in FY2017 to 48 for $40.9 million in FY2025 and 55 in FY2026.

Losses come early

Of 142 loans disbursed in FY2017 to FY2021, 9.2% have been charged off to date, and 7.0% were charged off before the fifth anniversary of approval, so most of the damage arrived in the opening years. That floor is above North Carolina's floor across classes and close to fitness nationally. Cancellation after approval was 12.2% for FY2017 to FY2024 approvals, or 13.3% counting undisbursed loans, in line with the usual pattern.

What a North Carolina gym study must test

With franchise units this common and lending this concentrated in Wake and Mecklenburg, the first question is saturation. A study needs a count of clubs and studios, branded and independent, within the trade area of the site, and an honest view of how many more members the area can produce. Cost has to show the full build out and equipment package the franchise requires, with the opening reserve on top. Since losses here have landed early, coverage of debt service should be tested month by month through the presale and ramp period, not on a stabilized year. With little 504 activity, the appraisal will usually cover leasehold value only, so the loan rests on cash flow and the guarantee.

Fitness carries no limitation line of its own: SBA records each loan under the industry its borrower reported, and these rates are cohort floors that can rise.