SBA 504 Fitness Center Feasibility Study in Minnesota

Low cancellations and four development companies

What marks Minnesota's fitness center loans under 504 is how few failed to close: just 5.4% were cancelled among the earlier approvals, and counting undisbursed loans changes nothing. The file holds 43 approvals from FY2017 to FY2026 worth $32.9 million. Minnesota is 6 nationally by count, fitness centers hold 9 of 39 within Minnesota, and franchises are 18.6% of loans.

Who finances them

Four development companies are named: Twin Cities-Metro Certified Development Company with 17 loans and $15.9 million; Midwest Business Finance Corporation with 11 and $4.4 million; and two with 5 loans each, Amplio Economic Development Corporation at $3.5 million and Southeastern Minnesota 504 Development Corporation at $2.4 million. The first alone accounts for the largest share of dollars. Hennepin County leads the counties with 10, Ramsey has 4, and Scott and Washington have 3 each.

Loan size

The median, $465,000, is only 0.59x of what fitness centers borrow nationally under 504, so Minnesota loans run well below the national typical size, with half between $219,500 and $970,500. Annual counts peaked at 8 in FY2021 and dollar volume reached $6.5 million in FY2025 on only 3 loans, which shows that a few larger buildings moved recent years.

The charge-off gap

No charge-off figure is printed, as the earliest funded loans are too few loans, and a gap of that kind says nothing about quality.

Club economics for a 504 building in Minnesota

Fitness centers under 504 are often building purchases or new construction, so the study should test the site as much as the club: parking, ceiling height for equipment, zoning and the cost of mechanical systems that handle humidity. Membership forecasts need the catchment's population density, competing clubs, boutique studios and municipal facilities, and Minnesota winters mean indoor demand is strong from fall through spring while summer attendance dips. The model should show dues, retention and add-on revenue, then payroll and utilities. Because the loan is for real estate, the appraisal will ask whether another operator could pay the rent, and the study should show how quickly a membership base builds. With a median near $465,000, a larger project deserves evidence of density to support it.