SBA 504 Fitness Center Feasibility Study in Illinois

Development companies hold almost every loan

Illinois is a strong 504 state for fitness centers, with the loans concentrated in the development companies named here. Small Business Growth Corporation carries 24 loans worth $26.3 million; SomerCor 504, Inc. carries 18 worth $21.6 million, of the 48 loans on file; gross approvals add to $55.3 million, tallied FY2017 through FY2026. Illinois is 5 among states for the class and fitness centers stand at 6 of 39 within Illinois. The list reflects whichever institution SBA shows as holder now; it does not describe either company's approach to new requests.

Size, geography and franchising

The median loan is $829,000, about 1.05x the 504 benchmark for fitness centers nationally, and the middle half runs from $397,500 to $1.4 million. Those are loans to buy or improve a building for a gym or studio, which is the purpose of 504 financing. Franchise affiliation is 4.2% of loans, so most borrowers are independents. Will County has 8 loans and Lake 6, with Cook and DuPage at 5 each, which means the collar counties outweigh Chicago itself. Sangamon has 4, and Kane, Madison, McHenry, Peoria and Saint Clair 2 each.

The year-by-year pattern

Volume was uneven. FY2019 shows 0 loans and $0, FY2020 only 2 loans with $1.7 million, and FY2022 jumps to 12 loans and $16.6 million. FY2025 and FY2026 each show 6 loans, at $6.0 million and $10.2 million. Illinois shows a cancellation floor of 8.3% on FY2024-and-earlier approvals, with the ceiling again at 8.3%. Illinois fitness loans have no printed loss rate because the earliest disbursed loans are too few; it is withheld, never zero. The record cannot say whether fitness operators were affected by closures, only that the loan flow recovered.

What an Illinois fitness study has to test

A fitness center is sensitive to who lives and works within a short drive, so the study should count households by income, employers, competing gyms and boutique studios, and the capacity of the proposed square footage. Membership revenue should be built from joining rates, retention and price points, with attrition tested, since members leave more readily than customers of most businesses. Because a 504 loan finances fixed assets, the study must justify the building's cost, parking and ceiling height against the concept. A downside case should address a slower membership ramp, and an appraiser will need to show what the property would fetch from a non-fitness user. That comparison tells a lender how well collateral holds up if the gym fails.