Fitness Center Feasibility Study in Ohio

Ohio fitness: a high count of modest loans

By number of deals, Ohio is one of the country's bigger fitness lending states. Gyms rank 3 of 39 among Ohio's asset classes, the state ranks 5 of 54 nationally, and SBA approved 547 loans for $177.6 million from FY2017 to FY2026. What stands out is how little each deal borrows. Ohio's median fitness loan is $150,000, or 0.58x the class median nationwide, and this median marks the cell off from both Ohio's all-asset lending and fitness nationally. The interquartile spread runs from $50,000 to $413,200. With a location quotient of 0.85x, gyms take a little less of Ohio's SBA lending than their national share would predict, despite the high count.

The Huntington National Bank holds 270 of these loans for $59.6 million, about half of the state's total. KeyBank National Association follows with 30 loans and $12.5 million, then U.S. Bank, National Association with 19 and $8.8 million, JPMorgan Chase Bank, National Association with 12 and Telhio Credit Union Inc with 11. SBA 7(a) carried 517 loans, SBA 504 only 30; Community Capital Development Corporation holds 9 of those for $6.9 million and Alloy Development Co., Inc. 7. Franchise brands appear on 35.8% of loans, so independents still make up the larger part of the market.

Late losses and an approval gap

The 223 loans that funded during FY2017 to FY2021 show 5.4% charged off to date but just 1.3% within five years of approval, so the bulk of that group's loss landed later than five years out. Cancellation after approval is 12.1% of FY2017 to FY2024 approvals as a floor and 15.8% as a ceiling, a wide gap that reflects approved loans still waiting to fund. Annual volume ran from 67 loans and $25.5 million in FY2017 down to 39 loans in FY2020, and up to 56 loans and $30.4 million in FY2026.

The Ohio gym study, item by item

Lending is concentrated in Cuyahoga with 91 loans, Franklin with 70, Hamilton with 50, Summit with 36, Butler with 33 and Medina with 31. Demand should be measured as members inside a realistic drive time, after counting rival clubs and studios and the brand's own nearby units. Cost means lease terms, build-out and the equipment package. Debt service coverage has to survive the late-life weakness this cohort shows, so the study should run the later years of the term on lower membership and higher equipment replacement, not just the opening ramp. With little real estate in the deals, the appraisal will lean on business cash flow, and the study's member forecast is what holds that value up.